Shaping Expectations &
Enrolling Committed Students
Peter Goodson
Center For Teaching Excellence
Day 2 8:30-9:45 am
S480
“Well, class, now that we can agree on the work load this term”
Overview
Goodson’s Bias and Discussion Caveats
Goodson’s Bias
The first class is the only time where …
•
course expectations are shaped
•
conditions are agreed to
•
student decides to enroll or opt out for another course
A time for candor and clarity as my course is not for everybody
The vast majority of Hass students crave to …
•
be challenged
•
be worked hard
•
maximize the return on their investment
•
further their career perspective and skill sets
A minority of underachievers or poorly motivated students …
•
should not lower the teaching standard at all and be
politely tolerated…
•
focus on those that invest in the learning and discourage the
rest from taking the course
We
•
•
•
owe he students a chance to withdraw if the fit is not right…
I am brutally candid as to the course shortcomings
stress the heavy work load per unit
hammer the very tough rules of the road
Want a friend buy a dog. Respect comes from delivering value in
the classroom
Discussion Caveats
Comments are aimed at electives, probably to
tough for core cores as the students have to
take the offering without choice
Assume that the course is test marketed
carefully and designed to be a popular elective
(if not, redesign it)
Assumed that the teacher would be effective at
pre- marketing course
Pardon the typos and grammar
Overview
Today's Agenda… The Five C’s
1. Clarity:
Who the course is designed for?
What the course is and what it is not.
2. Challenge:
A 3 unit work load for a 2 unit course delivers high value but at a cost.
3. Conditions of Enrollment:
The rules are the rules- be clear on the way the class works
4. Class Room Confrontation:
Training in the real world atmosphere ….demanding classroom tension
5. Open Criticism Of The Course:
Enrollment insight from negative student comments from past evaluations
Clarity:
Course Is Aimed at Future Decision Makers
The class is taught primarily for students who want to be decision
makers whose career aspirations include…
9Top level executive positions (CEO, CFO),
9Partner in a M&A advisory firm- investment bank
9Partner in a management consulting firm
9Partner in private equity firm
9Entrepreneur or start up founder
9Partner in venture capital firm
Overview
Clarity…
Survey Course Organized Into Stand Alone Disciplines And Applications
9It is a survey course covering 9 topics, each of which could be taught as an
entire course. Topics are divided into disciplines (basics )and applications…
9Each topic is discreet and much of the value of the course is provided in
classroom interaction
9Attendance of all sessions is therefore critical
5
Clarity:
Deliverable In Terms Of Career Perspectives & Skill Set
The career benefit of the course is to offer experience-based lessons to
enhance the students ability to create shareholder value and avoid costly
pitfalls in buying and selling businesses!
The course design is aimed at…
•Developing judgment …Sharing lessons in distinguishing practices that
create value from those that result in loss
•Exploring leadership …Directing an insightful acquisition process geared to
mitigate risk in order to capture return followed by lessons
in managing after closing to operationally improve the results of the
acquired business
•Polishing acquisition negotiation-related skills …Capturing the advantage in
the tradeoffs inherent in doing a deal and in establishing a win-win
scenario with the CEO and top managers of the acquired company
after the transaction has been completed
6
6
Clarity:
The Course is not a Bunch of Canned Formulas Nor A List of Equations That
When Applied Produce Value
We provide practical approaches to problem solving in ambiguous settings as well
as leadership practices that have proven to be successful in the real world
9
The “human factor” is dominant, the variables independent, and logic is frequently trumped by blind
ambition and/or self-interested advisors.
9
This is not a corporate strategy course analyzing business combination
rationale slogans but rather focusing on measures that create incremental shareholder value
in measureable terms.
9
It is a domain where learned experience proves to be much more valuable than
textbook niceties.
9
Therefore, sharing the hard earned lessons gained by the Professor in participating in thousands of
mergers and acquisitions over the last forty years is a course cornerstone.
In this field, the most important insight is to teach you to know what to do
when you don’t know what to do.
Clarity:
Tutorial for M&A and Turnaround Course Slides
High Level “Slide Reports” for Owners, Chief Executives and Boards of Directors
We like to call the assignment slides in our courses “slide report's” rather than presentations. There are many
different types of slide “shows” aimed at different audiences and for different purposes. In our courses the format
is along the lines of what a management consultant like Bain would use to inform rather than persuade. Note that the
presentations when read would not need a spokesperson. They are clear without an oral presentation.
In this Tutorial we will outline the concepts below, format tips and provide examples to demonstrate what we
are looking for . The last slide is a graded slide that was poorly done which includes correctional comments.
Below is a conceptual outline :
1.
Meaningful Slide Heading: A opening statement or conclusion followed by the key conditions
necessary for the statement to be correct. An example… “The acquisition of XYZ for $20-$25 a
share will add 15% or more shareholder value if operating improvements doubling EBIDTA can be
delivered in 5 years”. It is an anchoring statement for the audience. It must deliver the key
advantage and state what must be done or the risk in achieving the result.
2.
Primary Supporting Points: Notice that on each example slide there are three to five points
that support the slide heading. Each supporting point is clearly stated and not abbreviated. If
you were to read the heading and then the supporting points together, the students’ position would
be clearl without detail to verify.
3.
Detail Verifying the Supporting Points: Under each supporting point is the detail that
justifies the conclusion of the supporting point. We encourage students to embellish detail with
imaginary knowledge not contained in the case. The governing point is that the logic of the detail
must link into the supporting point. HBS cases in particular can be a little broad brush so we want
you to be creative as to what other information, had it been available, that you would have included
and invent theoretical detail points that you view would be critical to your analysis even though
these facts might not be available in the case.
Slide Format: Teaching Team– Peter Goodson, Paul Mackinaw
8
Challenges:
A 3 Unit Work Load In A 2 Unit Course Delivers High Value
But Demands A Significant Investment of Your Time
9To deliver the full course value a serious time commitment is necessary
4 cases… 3 of which students
present in class
3 additional case studies to be
discussed in class and students
are intensely grilled
“This course is a little like drinking from a fire hose
in its breadth and velocity” … A former student
9
9
Challenges:
Cold Calls And Consequences
I give students “cold calls” in advance so there is focus on what we want
them to specifically master in the reading material.
Everybody uses cold calls so what is
different than some in my class is what
happens if the student is not prepared.
9It been expressed by former students that being unprepared is a
highly uncomfortable experience in front of your peers
9I then role play a unprepared response with a student shill… Silly but
very effective and rarely do we find an unprepared student
going forward
10
Conditions of Enrollment:
The Rules Are the Rules- Be Clear on the Way the Class Works
No Such Thing As A Late Assignment...any assignment turned in late results
in a failure and will not be graded. There are no exceptions.
3 On A Team… free riders will balk but you will learn more. Time tested.
Not optional!
Not A Correspondence Class… individual answers from the GSI’s are not
given. We organize a web spot and answer questions collectively
and share with the whole class… adds value… trust us
No Computers or Cell Phones …the PowerPoint's provide ample notes;
computers are not allowed in class nor are cell phone calls
Name Plates Required…to better personalize a large class, enable cold calls
and comfort for visiting speakers each session
Be On Time… be in your seat at the beginning of class or wait to rejoin at
the break. We take the view that it is a requirement to be prompt
in most workplaces so we shouldn’t give you bad habits here
Attendance Required… be here - much is taught via the case method and
the value is in person exchange . Two unexcused absences carries a
huge penalty
Class Room Confrontation:
Training in the Real World Atmosphere …
Instructive Classroom Tension
9 Settings And Styles Vary... But one of the distinctions in this course is that
three assignments are framed in a way that the student is the advisor or
principal making a case in a presentation either for or against a deal.
9 Context…. The audience is either a CEO, a board or a group of investors. Realize
that outside advisors usually face tension packed settings where their
findings are openly and forcefully challenged.
9 Intellectual Tension …We create a tension by training your peers to drill down
on the supporting logic of your point of view. When you are not
thought-out it becomes very obvious.
9 Conflict at Haas… This style of active interrogation and free for all argument
is not often experienced in the Haas environment. Students seem
uncomfortable in navigating a seemingly "aggressive" atmosphere. Hence we
give them some practice at real world disputes involving big money and
huge stakes.
12
Student Quotes From Actual Evaluations
Criticism:
Professor Too Tough On Students In Front Of Peers..
Slides Too Crowded … Lectures Loaded With M&A Slang
“Embarrassing students who were not prepared was not necessary” (2008)
“Too much information on slides which made following the lecture difficult” (2004)
and “frequently flipped through slides too rapidly” (2004)
“The jargon of the industry was particularly difficult to comprehend as it
was very different than the academic vocabulary of most classes” (2004)
“The American slang was very difficult to follow for an International
student” (2005)
On the other hand …
“Wish more professors were openly tough on the unprepared … we pay too much to
put up with someone who has not read the material and wants us to slow
down or wants to shift topic and tell us how great they are” (2009)
“Unique opportunity to understand how practitioners refer to their trade” (2004)
“Slides were a great resource of information distinguishing concepts on a
standalone basis” (2005)
13
Student Quotes From Actual Evaluations
Criticism:
Not Much Hand Holding On Assignments
“Did not provide detailed step-by-step instructions
for assignments” (2009) and “Not obvious how to
do projects” (2004)
“Could have spent more time teaching modeling” (2004)
“Did not walk through the ‘details’ of any of the
assignments” (2008)
On the other hand …
“If you like formulas and step-by-step certainty, this
course is not for you”
“If you like advanced problem solving and tackling
ambiguity as it exists in deal making in the real world,
get comfortable and stay a while … great course for the
top executive/ownership aspirant” (2005)
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Student Quotes From Actual Evaluations
Criticism:
More Breadth Than Depth & Very Fast Paced
“Would have been great to have as a three-unit course” (2004) and
“I would have loved to have another five weeks” (2005)
“Moved over some questions too fast and sometimes glossed over
material leaving us to read from the text” (2010)
On the other hand …
“If you didn’t get Core Finance and Accounting when you took it and
struggled with simple modeling, this course will be tough”
(2004)
“Loved the pace … fast and furious … don’t slow down with irrelevant
questions from students speaking without preparing” (2005)
“Got much out of the time at Henry’s asking ‘ad nauseum’ [sic] questions
after class … unique experience to provide those with interest to
unlimited access to Professor” (2005)
“Each topic could have been a course … you cut to the chase – great
overview!”
15
EXHIBIT: MANAGING STUDENT SLIDE EXPECTAIONS
Tutorial for M&A and Turnaround Course Slides
High Level “Slide Reports” for Owners, Chief Executives and Boards of Directors
We like to call the assignment slides in our courses “slide report's” rather than presentations. There are many
different types of slide “shows” aimed at different audiences and for different purposes. In our courses the format
is along the lines of what a management consultant like Bain would use to inform rather than persuade. Note that the
presentations when read would not need a spokesperson. They are clear without an oral presentation.
In this Tutorial we will outline the concepts below, format tips and provide examples to demonstrate what we
are looking for . The last slide is a graded slide that was poorly done which includes correctional comments.
Below is a conceptual outline :
1.
Meaningful Slide Heading: A opening statement or conclusion followed by the key conditions
necessary for the statement to be correct. An example… “The acquisition of XYZ for $20-$25 a
share will add 15% or more shareholder value if operating improvements doubling EBIDTA can be
delivered in 5 years”. It is an anchoring statement for the audience. It must deliver the key
advantage and state what must be done or the risk in achieving the result.
2.
Primary Supporting Points: Notice that on each example slide there are three to five points
that support the slide heading. Each supporting point is clearly stated and not abbreviated. If
you were to read the heading and then the supporting points together, the students’ position would
be clearl without detail to verify.
3.
Detail Verifying the Supporting Points: Under each supporting point is the detail that
justifies the conclusion of the supporting point. We encourage students to embellish detail with
imaginary knowledge not contained in the case. The governing point is that the logic of the detail
must link into the supporting point. HBS cases in particular can be a little broad brush so we want
you to be creative as to what other information, had it been available, that you would have included
and invent theoretical detail points that you view would be critical to your analysis even though
these facts might not be available in the case.
Slide Format: Teaching Team– Peter Goodson, Paul Mackinaw
16
Format for M&A and Turnaround Course Slides
Slide Heading: Conclusion and key conditions to conclusion
(Note: There is a precise order to the slides that must be followed. The order of the slides is
mandatory and extra slides will not be graded forcing economy of thought)
Supporting points: arranged however you determine they will be most effective
Detail: linked clearly to supporting point
Slide Topic (Bold): Team name, team members names- first
then last …example below
Key Challenges: MS Team– Patrick Krause, Craig Hashi, Kimberly Petska 17
Slide Examples
The following slides are from a prior class. Yes there are typos and
incomplete thoughts or premises that you might not agree with. The purpose
is to give you a sense of the format and type of message points we are
looking for. Note there are different ways that students have created their
supporting points and details to make it more comprehensive if necessary.
The slides respond to a case which features a hypothetical hostile takeover
of SF (Salesforce.com) by Oracle. Each slide address a topic as follows:
Strategy (SF/Oracle value added and fit), Operating Improvements
(opportunities to enhance EBITDA at SF), Key Integration Challenges (for
Oracle) and Due Diligence (potential issues and plan to investigate).
Slide Format: Teaching Team– Peter Goodson, Paul Mackinaw
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Strategic Vision: Acquiring SF Is Attractive For Enhancing Shareholder Value Because It Potentially
Strengthens Oracle’s Suite Strategy By Increasing Its Applications Market Share And Expanding Its
Customer Base ...Integration Success May Be More Dependent On Expanding SF Margins As Up –Sell
Opportunities To Cost Conscious Customers May Prove Challenging
1
Enterprise market trends imply Oracle’s future growth
will not come from products that drove success in the past
2 Future growth opportunities lie in middleware and
•A maturing database market growing by only single-digit %
rates
•Oracle’s fastest growing middleware business is expected to
overtake database sales
•Declining license revenues implies perpetual license model is
threatened
•Significant opportunity to grow Oracle’s 34% share in the
$60bn applications market
•Decelerating maintenance revenue growth means shrinking
margins
•Modular design of Oracle’s end-to-end product suite
facilitates selling entire software packages to the high-end
market and independent software components to SMBs
•Emerging competitors gaining share as businesses delay
projects and CIOs shift to low cost solutions: SalesForce’s ondemand, VMWare’s virtualization, and RedHat’s open source
applications markets, validating Oracle’s suite strategy
•Access to SMBs adds opportunity to grow applications share
and up-sell middleware with attached high-margin
maintenance
3 Oracle’s successful M&A record indicates purchasing Salesforcecom will enhance shareholder value, but each
growth opportunity has corresponding risks
Opportunities
Risks
•Oracle’s proven integration strategy indicates cost savings
and productivity gains are achievable
•SF generates very small margins, making operating
improvements critical for adding shareholder value
•SF complements Oracle’s Siebel acquisition, potentially
achieving market leadership by offering Siebel’s richer ondemand solution over SF’s infrastructure
•Emerging competitors continue to gain share and SAP retains
market leadership due to a 15 year head start
•SF expands Oracle’s customer base by 77,300 enterprises
for significant up-sell opportunities to increase revenue and
margins
•Poor penetration rates in Oracle’s installed customer base
(96% bought <= 4 of 23 categories) cast significant doubt on
whether up-selling is achievable, especially to cost sensitive
customers
•Over $20bn in cash and $8bn in FCF put Oracle is in a strong
cash position to acquire SF
•A rapidly maturing $15bn debt load could put downward
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pressure on stock price if SF and controversial Sun purchase
, Sunder Thirupapuliyur
prove dilutive
Strategy: DKS Partners – Desmond Chan, Kishore Konakanchi
Operating Improvements: Can Achieve As much As 58% Additional Value Over SF
Standalone Projections From Moderate Revenue Increase And Improving Margins
By Reductions In G&A, Marketing & Sales Expenses.
Value at $149.15
G&A+$14.32 Marketing & Sales Expense
Improvement Improvement +$44.94
Salesforce.com standalone +$80.26
Salesforce.com
Standalone
Value based on:
Sub &Sup: 23% YOY
Prof Serv: 12% YOY
R&D:
10% Revenue
Mkt & Sales:43.5% Revenue
G&A:
13.0% Revenue
WACC:
10.56%
Discount Rate:10.88%
Exit Multiple: 37.1x
Intrinsic Value: $80.26
• Terminal Value 88.4% of
Enterprise Value
Market Value: $80
• Market price @ $26.61 on
Jan 2, 2009
Comparables: P/E multiples at
37.1x (mean) and 93.1x
(median)
Value Sensitivity:
• Discount rate: 8.88% to
10.88%
• Exit multiple: 27.1x to 42.1x*
• Value Range: $73.55 to
$87.72
* Exit multiples extrapolated
from mean of 37.1x (see
above)
G&A
Improvement
Marketing &
Sales
Improvement
Revenue
Enhancement
Revenue +$9.63
Enhancement
Key Assumptions
Rationale
Risk
• Drop from ~13% of
revenue to ~7.9 % of
revenue.
• Do not expect to drop to
Oracle’s G&A at ~2.8% of
revenue.
• Improves value for $14.32.
• Optimize G&A through
simplification of management
infrastructure.
• Maintain some Salesforce
G&A to run the online
business.
• May not be able to largely
integrate the management
infrastructure into Oracle
since the online software
business may have to run as
a separate business unit.
• Drop from ~43.5% of
revenue to ~31% of revenue.
(Halfway to Oracle’s %)
• Do not expect to drop
Oracle’s Marketing & Sales
expense at ~18% of revenue.
• If done right, this can be
optimized further in the
longer term.
• Improves value for $44.94.
• Reduce overspending on
marketing and sales to
improve net margin (around
~12% of net margin in
2010).
• Leverage Oracle’s sales
engine to help sell SFA into
the Enterprise space.
• Reduce duplicate channels
and combine marketing
campaigns.
•Sales strategies and tactics
may be largely different for
Enterprise customers as opposed
to SMB customers.
• Joint marketing campaigns may
not be effective.
• If the M&S expenses can only
be reduced to ~37% of the
revenue, the value improvement
is only $17.97 and the overall
value is thus around $122.18.
• Moderate improvement
from ~23% YOY growth to
~25% YOY growth.
• Do not expect to reach
Oracle’s historical growth
(software license growth
hovers ~40% and Update and
Support hovers ~12%.)
• Improves value for $9.32.
• Suboptimal macro economic
atmosphere drives
insignificant market growth.
• Cloud and social platforms
will need time to take off.
• Revenue improvement due
to reach to Enterprise
segments through Oracle.
• High switching costs for
Enterprise customers results
in slower conversion of new
customers.
• Cannibalization if Oracle
decides to push their own
CRM product online.
• Incentive systems for the
sales force and channels may
be confusing leading to less
revenue.
Operating Improvements: DKS Partners – Desmond Chan, Kishore Konakanchi , Sunder Thirupapuliyur
20
Key Integration Challenges: Integration Will Be Difficult, But Can Be Managed By: Frequent
Communication, Clear Goals, And Ruthless Adherence To The 120 Day Plan
Strategic Goal: Objective
Responsible
Measurement
Timeframe
Communication: Ensure that all retained
employees are aware of the acquisition
logistics, plan, goals
Customers: Retain 100% of top 30
customers, Retain 85% of top 50 customers
People: Ensure that key talent is retained,
benefits are migrated, options issued, etc.
Product: Define CRM package integration &
marketing plan
Oracle VP of HR
Employee survey to gauge awareness &
acceptance of acquisition, goals, etc.
CRM/Oracle VP of Sales &
Marketing
Oracle VP of HR
Retention of customers
Close of deal - days 1 – 10
communication, on-going
weekly communications
Close of deal + 30 days
Oracle VP of CRM
applications
Operations: Recognize proposed cost
savings measure
Oracle VP of Facilities,
General Council
100% retention of employees flagged as
key contributors
A board approved project plan for
integrating product code, processes for
CRM applications
Negotiated termination of leases,
approved facilities relocation plan
Close of deal + 60 days
Close of deal + 120 days
Close of deal + 90 days
120 Days
Day 1 - 30
Day 30 - 60
Day 60 - 120
Day 120 +
• All hands meeting with CEO,
welcome, roles, rationale, goals
• Responsible sales reps reach out
to customers, nothing’s changing or
improved service
• HR brown bag lunches, how to
register for benefits 401K, etc.
• Talent evaluation period by
department heads
•SWAT teams formed to support
customers during transition
• Product integration teams formed
• Check in with key customers by
Oracle VP of sales, your business is
important – were here for you
• Key talent is flagged, incentives
defined
• Termination decisions are
finalized
• Product & platform integration
teams begin technical assessments
and begin to draft integration
roadmap for first wave of
integrated products (CRM Suite)
• Key talent locked in with options
incentives
• New reporting structures
finalized, communicated
• Operational processes revised,
facilities move planned and
executed
• Draft roadmap for CRM suite of
products completed, approved
• Draft platform integration teams
formed
• Talent re-assessed,
tweaks made
• New CRM POV
presented to customers
• Long-term platform
integration teams
complete preliminary
draft of product roadmap,
begin defining technical
specifications and project
timeline
Weekly communications sent to employees via HR, customers via sales reps during integration period
Key Integration Challenges: M&A Team– Patrick Krause, Craig Hashi, Kimberly Petska 21
Due Diligence: Unconventional Approach In A Hostile Offer...
Needs To Be Rigorous , Completed Well In Advance of An Offer Launch And
As A Result Of An Uncooperative SF Management – Completely Independent of SF
Priority for Omaha:
Evaluate the business, operational, integration issues important to a successful merger and integration without relying on mgmt.
Potential Issues to Remedy
Business and Operations:
Diligence Tactics
‰ Examine the veracity of Springfield’s operational reports and
projections
• What contracts (incl. longterm) are in place with customers/vendors?
• What factors could lead to inaccurate revenue or margin reporting?
• What labor contracts (in-house or outsourced) are in place?
• What overlaps exist in buildings and staffs that can be removed?
¾ Reach out to former Springfield executive Mike Napiltonia
ƒ Was Senior VP of worldwide distribution and alliances
ƒ Can help Omaha understand operational overlaps
¾ Use Omaha’s relationship with Springfield vendor Appirio
¾ Discuss rev+marg w/ former senior sales rep, Mike Minelli
‰ Determine how Springfield’s product line is positioned in the market
• How is the market trending with regards to SaaS/cloud/social CRM?
• What investments have been made to address these dynamics?
• How secure is Springfield’s position w/ customers in the marketplace?
¾ Continue to study Gartner’s detailed market reports
¾ Discuss investments w/ Frederick Kerrest (former biz dev)
¾ Leverage our firm’s relationships w/ Springfield customers
ƒ Qualcomm, Analog Devices, Motorola
‰ Evaluate any potential problems with integrating technology:
• How well does technology integrate with Omaha’s current stack?
• What IP is owned by Springfield, and are there likely infringements?
• What potential security issues exist with Springfield’s cloud products?
¾ In friendly talk w T. McKinnon, former head of engineering
ƒ Founded security company; will discuss tech/strategy
¾ Bring in Omaha tech leads to assess product integration
Integration and Acquisition:
‰ Determine the personnel important to make the integration successful
• Which management personnel are key to running Springfield unit?
• Who are the best candidates to serve on an integration team?
• What is Springfield staff sentiment regarding a merger with Omaha?
• How will the culture at Springfield fit in with Omaha?
¾ Enter talks with former Springfield exec, Steve Cakebread
ƒ Served as president, CFO, and chief strategy officer
ƒ Sources indicate his relationships w/ management could
give insights to culture, key personnel, and possible
integration team candidates
‰ Evaluate the likelihood of garnering enough support to execute a merger
• Which board members may be in favor of a friendly merger?
• Which investors are the best candidates to approach for support?
• What are the timeline and fees that Omaha is likely to face?
¾ Examine board voting history; leverage talks w/ ex-execs
¾ Starting with largest investor (Fidelity), use proxy solicitor
and ad campaign; work down the list of top investors
¾ We can put together report with likely fees and timelines
Due Diligence: Delphi Capital – Sri Kasetti, William Sue, Steve Vargas
Delphi Capital
22
Bad Slide Example
The following report slide is horrific. The teams’ original is in black ink and
the professors rather harsh comments are in red. The purpose is to give you
a sense of what doesn’t work.
The case covers Cooper’s investment bankers (Haas Team) giving advice to
the CEO and board as to the merits of acquiring and how to go about
negotiating to buy Nicholson File. This slide was meant to be the summary of
the main conclusions and support of those conclusions.
I included the slide because it has value in assessing what not to do… cheers!
The sequel is that this team went on to turn in many excellent reports
thereafter and recovered from this embarrassment with their dignity intact
and lessons learned. They also taught me some things about teaching. From
this class forward I have worked with all teams on their drafts in advance of
submission on the first case of each term. There are so many variations to
slide “etiquette” and most students have not worked at this level in
organizations or with leading management consultants so the content and
formats of “slide reports” may be new. A great lesson for me as an educator.
Slide Format: Teaching Team– Peter Goodson, Paul Mackinaw
23
Example of shallow thinking from a 2008 Cooper presentation. Professors
comments in red…
Executive Summary… in a few words you might want to give us the summary instead of a heading
suggesting a summary- boards are bright and can handle conclusions and key conditions in a sentence
Nicholson is a prime acquisition target for Cooper. Because? Nicholson is in a weakened position
fending off unwanted acquirers What is it weak?.. Tired, hungry…exhausted?
Nicholson’s leadership in its segment of the hand tools market is well aligned with Cooper’s acquisition
strategy …So what and how so?
Acquiring Nicholson will reduce Cooper's stock volatility, without any dilutive effect. Because? At
any price? This is naïve and totally un-supported my B.S. meter is flashing danger!
Operating improvements present an EPS upside of 15% - 20% over the next 3 years. If we do what
to the business? What execution risks need addressing in improving opps? B.S. throwaway lines –
salesmanship hype… no analysis suggested!
Leveraging this upside what does that mean? requires a deal structure
Nicholson management who want to remain in place. More BS.. Why do
capture Nicholson management who have been underperformers. This
all. They own next to no stock to begin with. More likely we will fire
heck are you all talking about?
that meets the needs of
we structure the deal to
does not make any sense at
the CEO day 1. What the
Cooper should move quickly to place an offer to acquire Nicholson for $50/share in a 50% stock /
50% cash deal. Because? Oh boy I get to read 9 more slides!
This is embarrassing… there is zero depth to your thinking. Your clichés don’t even make sense. This
would be poor even for a freshman college student. Spend time and think it through next time. You
are addressing a first rate CEO and Board not a bunch of co workers at a company picnic.
This was not worth the read starting with the first slide. But it got worse when I turned the page…
24