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November 2009

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FROM THE PEN

Mergers and acquisitions

We’ve commented, almost ad nausean, about the global financial crisis. We’ve highlighted what we think went wrong, what the profession needs to do to combat the effects of the crisis, and we’ve alluded to the potential opportunities that exist within our new economic reality. We’ve said that governments, the world over, must combat joblessness without ossifying the labour market, i.e. encourage creative human resource opportunities such as less hours – less pay as opposed to no hours – no pay, because intellectually we understand that to separate people from their skills in the workplace places a formidable pressure on future productivity and, by extension, fiscal growth.

Rahm Emanuel, US Chief of Staff, has famously said that you never want a serious crisis to go to waste, as it allows you to do things you never thought you could do before. What he ultimately meant by this is that problems bourne out of the crisis provide a myriad of opportunities for change. He rightly alludes to the fact that the problems faced now have been there for many years, but that the crisis affords us an opportunity to identify easily the weaknesses within our systems, and address them with a sense of urgency. It indeed allows us to separate the things that work from those that don’t. Some pundits have even gone as far as to suggest that governments should not bail out large corporations if they fail, but rather use the opportunity to invest in new ideas and new businesses.

So what the crisis also allows us to do, is create new opportunities and do away with bad practices. It allows us to rewrite policies and regulatory frameworks. It allows for new ideas to be aired and listened to, and creates the perfect environment to invest for long-term gains, and to attract and retain talent without the associated high costs.
Dave Thyser, on page 18, also shares this opinion as he tells us that the climate surrounding the economic slow down allows dealmakers the perfect opportunity, for instance, to assess the failures or weaknesses of merger and acquisition activities, and begin to redress these as we wait for an upswing within this area.

The opportunities are indeed present now, and as the G20 recently announced, the storm is abating. But now, surely, we need to be cognisant of what is needed to create a new way of conducting business. How do we begin to leverage off our competitors’ disadvantages and win market share from them. Now is the time to spend money (if you have it, of course) and gain an upper hand for your long-term sustainable growth.

A study conducted in 2008 by the Boston Consulting Group tells us that this may not be the best economic times, but they might be the best times for corporate mergers and acquisitions. The research tells us that deals in an economic downturn may have a higher chance of creating shareholder value and delivering greater returns, than in upturn times.

I don’t know about you, but I wait with baited breath for the resurgence of a new reality. New ideas, new inventions, new management styles, new regulatory reforms, new procurements and spending reforms, new mergers and acquisitions, new training models that align to our what our country needs, and a new focus on climate change and energy security.

So, as you begin to prepare for the new year, please take into account the vast opportunities you and your business face during this time and don’t forget to look out for our special feature on sustainable development in our combined December 2009/January 2010 issue. Also note that we have a brand new column starting this month in partnership with the Lindhorst Estates, so please turn to page 36 to read about the product offering we’ve managed to secure for you.

Raina

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