Interesting discussions and analyses of when bluffing is ok in business (versus poker). Does it make a difference when everyone knows the rules of the game or expects bluffing to happen?
How to deal with doing business with someone when you don't agree with their end cause. One possible answer: do the business at cost so that your company and employees don't suffer from refusing the business but don't take profit in order to stay true to morals.
Glamour stocks (high price to cash flow, price to earnings, price to book) under-perform value stocks (and this has nothing to do with risk factors).
High monthly trading volume and high variability in trading volume both predict low expected return in the following month. These effects are even stronger than the size and book/market effects.
Irrational investor optimism causes high volume and is reversed out in the following month.
Investors can't short sell equities as easily as buying, so negative opinions aren't as easily/quickly traded (priced in) as much as positive opinions.
Retail Segment Effect (volatility from retail investors makes return reverse itself from overoptimism)
"Naive Asset Pricing Model": No CAPM. No APT. Naive investors transfer wealth to sophisticated investors.
It's possible to identify the most important characteristics for predicting returns, and these predictions beat the market considerably and work quite well on out-of-sample tests over a long period of time.
Best-performing stocks have a relatively low level of risk.
TV economics: huge land-grab for channels
All countries have followed the same path in TV adoption as the US did (going to 80-90%)
To consolidate income, you must own economic majority and have control over management and CEO.
To bridge gap in valuation negotiations, pay low multiple on initial income and then high multiple on rest, so if able to pull off growth, will pay more.
Most acquisition failures due to post-merger integration (PMI) problems.
Corp dev must fit with overall business strategy. What must we buy to succeed? Companies? People? IP?
Keep a wishlist of companies you’d like to own.
Track previous deals and how they performed compared to forecast when considering new deals someone brings.
Companies really good at PMI: Cisco, GE
Filter for culture meshing well with acquirer to prevent PMI problems
A good M&A lawyer is a business-enabler; a bad M&A lawyer over-lawyers and puts in way too many clauses.
LOIs are for the business people, not lawyers.
In international business, people make deals with you as a whole person. They watch how you interact with their family, how you drink tea, how you spend days just socializing, golfing, and not talking about the business.
The fewer warranties or hold-backs the seller wants, the more due diligence time will be required.
Structure non-competes to cover payback period.
Share Purchase Agreement does the acquisition, but Shareholder Agreement is the most important document after the deal is done.
Shareholder Agreement determines who will run it post-purchase, what requires majority versus unanimous decisions, etc.
Standard minority protections: sale of company, issuance of new equity, dissolution of company, related party transactions.
Must discuss how to get out of the deal/terminate/carve out/divorce
But divorce procedure rarely followed; so difficult that forces parties to talk and figure out some better plan.
Clawbacks over 1-2 audit cycles (2 years of holdbacks to discover things not paid or not accounted for right)
It's usually better to build than to buy.
Leverage specialists and be an orchestra conductor.
Have a PMI plan. Be honest with those who will get fired.
Avoid joint ventures at all costs. If required, focus on the Shareholder Agreement (exit clauses and paths to full ownership)