Wednesday, November 18, 2009
Thursday, November 5, 2009
Exploring "jugaad"
Entrepreneurship or "Jugaad" ... its equivalent word in Hindi is the latest fad and the bug that has bit me ...
currently just trying to list down all possible fields/ideas/sectors that have the potential to be the NBT ...
could be B2B .. ideally ... or could be a technological product that I'd have some clue about ... maybe on the lines of an i-pod or a walkman ...
or could be a major pain point in the health care services sector.
Though, one day I am definitely going to come up with the ultimate business plan and head it !
Thursday, October 1, 2009
Making sense of M&A news by BCG - Contd.
Following up on my previous post, another insight is:
The market cap of all companies last year was close to $60 trillion. Compare that with this year's market cap of $40 trillion or around 33% lesser.
Also, in light of the slowdown and cautiousness in corporate environment these days, one can expect the conversion ratio to fall somewhat. Maybe from around 20% to 15%.
Then M&A volume would drop by around 33*1.25 = 42%.
So, the value add by a consultant here is the fact that conversion ratios for M&A transactions would drop from 20% to 15%.
The market cap of all companies last year was close to $60 trillion. Compare that with this year's market cap of $40 trillion or around 33% lesser.
Also, in light of the slowdown and cautiousness in corporate environment these days, one can expect the conversion ratio to fall somewhat. Maybe from around 20% to 15%.
Then M&A volume would drop by around 33*1.25 = 42%.
So, the value add by a consultant here is the fact that conversion ratios for M&A transactions would drop from 20% to 15%.
Making sense of M&A news by BCG
Making sense of BCG's M&A news:
M&A volumes are supposed to be falling by upto 46% in this quarter compared to last year levels, according to a recent BCG study. The study also mentions that companies will increasingly carry out stress testing of their own businesses and the acquired businesses during deal-making stages.
Of the companies interviewed and assessed by the study, around 20% of the companies were classified as "predators" and another 20% as "prey" ... while the other 60% could be either predators or preys based on how they deal with the slowdown. That means at a conversion ratio of 10%, around 2% of companies are expected to carry out M&A transactions.
Estimating the worth of all corporate wealth based on the market cap, we have a figure of US $40 trillion.
2% of that comes up to a little under $1 trillion or $800 billion to be precise.
Based on a Reuters article from April last year, the Global M&A volume reached levels of $ 1 trillion in just 107 days, which itself was a decline of 27% from 2007.
http://www.reuters.com/article/privateEquity/idUSN1742497620080417
"It took 107 days for merger volume to hit the $1 trillion mark in 2008, compared with 85 days in 2007 and 93 days in 2006." the article says.
The 46% decline then makes sense with a conversion ratio of around 20%.
That implies a volume of $2 trillion in 2009, which would have taken 220 days in 2008 but will take 220/(1-.46) ~ 400 days ~ 1 yr in 2009 because of 46% decline.
Bottomline: Around 20% of M&A deals between predators and preys goes to conclusion.
Of the companies interviewed and assessed by the study, around 20% of the companies were classified as "predators" and another 20% as "prey" ... while the other 60% could be either predators or preys based on how they deal with the slowdown. That means at a conversion ratio of 10%, around 2% of companies are expected to carry out M&A transactions.
Estimating the worth of all corporate wealth based on the market cap, we have a figure of US $40 trillion.
2% of that comes up to a little under $1 trillion or $800 billion to be precise.
Based on a Reuters article from April last year, the Global M&A volume reached levels of $ 1 trillion in just 107 days, which itself was a decline of 27% from 2007.
http://www.reuters.com/article/privateEquity/idUSN1742497620080417
"It took 107 days for merger volume to hit the $1 trillion mark in 2008, compared with 85 days in 2007 and 93 days in 2006." the article says.
The 46% decline then makes sense with a conversion ratio of around 20%.
That implies a volume of $2 trillion in 2009, which would have taken 220 days in 2008 but will take 220/(1-.46) ~ 400 days ~ 1 yr in 2009 because of 46% decline.
Bottomline: Around 20% of M&A deals between predators and preys goes to conclusion.
Tuesday, January 13, 2009
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