Ron Rhodes

Accelerating Growth and Accelerating Growth and Avoiding “Surprises”Avoiding “Surprises”

Ron Rhodes

The #1 challenge facing The #1 challenge facing companies today is the slow companies today is the slow growth of their core productsgrowth of their core products

Ron Rhodes

The #2 challenge is The #2 challenge is profitabilityprofitability

Ron Rhodes

Are you satisfied with your Are you satisfied with your current growth rate?current growth rate?

Are your profits growing at a faster rate than your sales?

Ron Rhodes

There is a way to increase the There is a way to increase the number and quality of your new number and quality of your new

growth opportunitiesgrowth opportunities

And it is a proven, repeatable business building process that is guaranteed to

deliver results

Ron Rhodes

Executing and Managing Executing and Managing GrowthGrowth

• Sell more units & services• Raise prices• Introduce new products• Reduce costs• Acquire external opportunities

Ron Rhodes

External OpportunitiesExternal Opportunities

• Company acquisitions

• Product acquisitions

• In-out licensing of products and technology

• Joint ventures, alliances and partnerships

• Distribution agreements

Ron Rhodes

Are you following a “reactive” Are you following a “reactive” rather than a “proactive” rather than a “proactive” business development business development

strategy?strategy?

Ron Rhodes

““Reactive” StrategyReactive” Strategy

You sit back and wait for outside deal makers to present over-priced and questionable business fit proposals while they are showing them to your competitors at the same time.

Ron Rhodes

““Proactive” StrategyProactive” Strategy

You use a proven program to uncover and pursue product and company acquisitions, in-out licensing of technology, joint ventures, alliances and partnerships before your competition finds out about them.

Ron Rhodes

Strategic Acquisition Strategic Acquisition ObjectivesObjectives

• Build value – higher profits and cash flow• Use strategic acquisitions as an integral part

of your growth strategy• Strengthen your management team• Expand customer relationships

• Provide more products and services• Increase the number of your customers

Ron Rhodes

Strategic Acquisition Strategic Acquisition QuestionsQuestions

Does the new opportunity fit with your long-term strategic objectives?

After the closing, how will the business function operationally and will there be near-term operational synergies?

Are the key managers people you can work with?

Ron Rhodes

Strategic Acquisition ProcessStrategic Acquisition Process

Plan + Uncover + Due Diligence + Integrate

Ron Rhodes

• Plan and prepare to increase your number of good opportunities

• Uncover opportunities before the become “for sale”

• Avoid “surprises” with a management due diligence

• Integrate to strengthen management team

Ron Rhodes

Plan and Prepare to Increase Plan and Prepare to Increase Your Number of Good Your Number of Good

OpportunitiesOpportunities

• Plan your business realistically going forward

• Develop focused criteria for each component of growth

• Establish external opportunity contribution goals

Ron Rhodes

Uncover Opportunities Before Uncover Opportunities Before They Become “for sale”They Become “for sale”

• Identify target companies of interest in your market universe

• Search and uncover company intelligence

• Prioritize potential opportunities by fit

• Making initial contacts before your competition with networking + direct marketing

Ron Rhodes

Avoid “surprises” with a Avoid “surprises” with a Management Due DiligenceManagement Due Diligence

• Holding preliminary discussions - establishing relationships

• Determining business and people fit

• Conducting management due diligence

Ron Rhodes

Why a management due Why a management due diligence?diligence?

Eliminate surprises Reduce risk Building relationships and team Identifying the Hidden Assets and Liabilities Understanding where the potential acquisition best

fits operationally Need to balance the financial and legal aspects of

acquisitions with operational, people and business considerations

Ron Rhodes

What is it?What is it?

• Conducting a “through investigation”• Asking & re-asking questions• Digging up facts• Dealing with people as well as financial and legal

issues• Understanding the real picture of the business you

are acquiring including the Hidden Assets & Liabilities• Looking past “what people say’• Determining “what they think”

Ron Rhodes

What Hidden Assets & Liabilities do What Hidden Assets & Liabilities do not appear on traditional financial not appear on traditional financial

statements?statements? Management team Organization culture,

politics, competency & skills

Information flow, know how & databases

Market Position Distribution channels Customer

Relationships Brand Image Alliances &

partnerships Patents & trademarks

Ron Rhodes

Questions to keep in mindQuestions to keep in mind

• You can’t get the right answer if you are asking the wrong question

• The wrong person asking the right question will not get you the right answer

Ron Rhodes

Integrate to Strengthen Your Integrate to Strengthen Your Management TeamManagement Team

• Identify key management

• Determine if they want to work with you and if they will fit into your culture

• Move quickly to integrate to get all of your employees back focused on business building

Ron Rhodes

Merger SuccessMerger Success• When do you know if an acquisition has been a success?

• Probably not until three years after the closing• Most of your merger integration issues will have been dealt with• You will know which of the acquired people you can count on• You will understand how much growth you can get out of the acquired products

Ron Rhodes

Key M&A pointsKey M&A points

It is not the “art of the deal” that determines your success with acquisitions but how well you manage the new business going forward

Ron Rhodes

Key M&A pointsKey M&A points

People are more important than numbers and products in buying businesses

Ron Rhodes

Key M&A PointsKey M&A Points

Strategic acquisitions where the buyer understands the business and can bring value-added benefits represent the best opportunities

Ron Rhodes

Key M&A pointsKey M&A points

The price you pay is not as important as how long it will take you to double the acquired company’s sales

Ron Rhodes

Key M&A PointKey M&A Point

Don’t expect the acquired company’s key executives to work harder for you after the closing especially when they receive a large payout from the transaction

Ron Rhodes

Key M&A PointKey M&A Point

Initiate synergies early and at one time so your workforce can re-focus on achieving the strategic leverage and accelerating growth

Ron Rhodes

Key M&A PointsKey M&A Points

“Mergers of equals” like joint ventures only work if one CEO takes leadership for the strategic, operational and cultural integration

Ron Rhodes

Why Do Mergers Fail?Why Do Mergers Fail?

Ron Rhodes

Reasons for merger failure Reasons for merger failure

Inadequate management due diligence Lack of a compelling strategic plan and rationale Unrealistic expectations of possible synergies Paying too much for the new business Not recognizing different agendas and cultures Poor communication to employees Failure to move quickly to integrate the company Top management agenda out of line with

stockholder interests

Ron Rhodes

Strategic Acquisition ProcessStrategic Acquisition Process

Plan + Uncover + Due Diligence + Integrate

will

Accelerate Growth and Eliminate “surprises”

Ron Rhodes. . .40 Years of Ron Rhodes. . .40 Years of Strategic Business BuildingStrategic Business Building

• Due Diligence Group. . .strategic business development consulting

• ATTLAS Directory. . .created and built licensing and technology transfer print and online information service

• Revlon Health Care. . .as VP Planning took $60 mil co. to $1.5 bil with 50 strategic acquisitions

• ITT. . .Business Analyst for conglomerate that added $4+ bil in diversified acquisitions