While export financing transactions can carry numerous risks, the current situation in the European Union (EU) and specifically the turmoil in Cyprus highlight two of the primary risks in export finance; political instability and currency risk. The euro, which is the common currency between the 17 countries that make up the EU, has been under varying amounts of pressure since 2009 when financial issues for several member countries started to surface. Distressed member countries include Greece, Portugal, Ireland, Spain, Italy, and most recently Cyprus.
The financial issues for these and other beleaguered countries start with sovereign debt levels that make it difficult to access capital without paying above market rates. The excessive sovereign debt of these countries has in turn put pressure on the banks, which in many cases are much larger than the economies of the struggling country.
While the situation in Cyprus has largely been contained, it appears to be only a matter of time before the next financial crisis hits another member of the EU. This also means that businesses that rely on export finance should remain vigilant against potential volatility.
Measures that can serve to mitigate the inherent risks include currency hedges, shortening payment terms, having payments made in a currency that is not exposed to the level of volatility as is being experienced on either side of the transaction, and/or a combination of these options. In any case advance planning for these events, even in times of relative quiet, can make the difference between having a pre-set plan to put into action and scrambling to understand and react to volatile circumstances while wondering how much money is at risk of being lost.
Companies can wait for a long time to go public as they receive the last rounds of venture capital funding and then start the grooming process of getting ready for an initial public offering (IPO). In fact, new statistics show that, on average, a company will wait about decade between the time it receives venture capital funding and going public via an IPO, versus a wait of only four years during the 80’s. This average waiting period could actually be extended if, like the number of venture capital backed IPOs in 2012, the next few years average only 50 per annum.
That being said, there are still IPO’s being done, so here are 4 events you can plan on if you have an IPO on the stock market tarmac:
The sale of stock – Once the preparation for the IPO is completed and underwriters have determined the amount and price of the stares to be offered, the company stock that will be offered publicly is sold to investors. This process is usually handled by a group of brokerages, the number of which will be determined by the number of shares offered as well as the demand for them.
The company bank account gets a big deposit – For selling a pre-determined percentage of the company to its new shareholders, the business will have what is probably its largest single deposit put in the bank by the underwriting firm. The use of these funds will have largely been defined in the road shows that took place during the pre-IPO process; now is the time to put them to use toward further product development, expansion, hiring new employees, etc.
The shares hit the market – The initiation of trading on a public exchange such as the New York Stock Exchange (NYSE) the American Exchange (AMEX), or NASDAQ can serve as a validation for the growth of the company as well as its introduction to a new group of investors. One of the big surprises of trading on a major exchange for newly public companies is often the amount of communication that is required to keep up with information and questions can come in through both new and existing shareholders.
Increased attention – In addition to the communications that relate to investor relations, a newly public company will get lots of attention from the media, brokerage analysts, and their direct competitors. Much like being a celebrity, many of the people paying attention will be looking for weaknesses and flaws, which can be another surprise to companies that have only dealt with private investors in the pre-IPO days whose communications were primarily about wanting the company to do well.
The brave new world of being a public company after going through the pre-IPO process brings with it both positives and negatives. Companies should prepare for both sides of that equation as recognition and large amounts of cash in the bank are met with increased scrutiny from regulators as well as the investing public.
When you have decided that it’s time to entertain the possibility to selling your business you will quickly learn that you have a host of options with one of those being the sale of your company to a private equity firm. In terms of the changes that a company can go through in this type of liquidity event, it’s very possible that the greatest transformation for a business will occur after being purchased by a private equity firm. The reason behind this highly transformative process is that the typical private equity firm looks at its acquisition targets in a much different way than businesses seeking strategic partnerships or shareholders seeking long term growth.
The sole objective for most private equity firms is to buy at the lowest valuation possible and then sell at highest possible price in as short a timeframe as possible. For many businesses that end up selling to private equity firms, the process of overhauling finances, management, and operations can come as quite a shock as the new owners cut costs, lay off employees, and pare the company down to its most profitable divisions. Because many private equity firms specialize in buying businesses that are underperforming in total but have profitable assets or divisions, the changes that an acquired company experiences can be stunning.
For these reasons, it is imperative that businesses that are being courted for acquisition by private equity firms take these three steps prior to signing on the dotted line:
* Do a deep dive with due diligence – One of the first things to do is to start researching the potential acquirer. Contact the firm’s past acquisitions to see whether the new owner brought only money and attorneys or actually provided resources that improved the operations and revenues of the business. In short, find out whether your potential new owner acted as a partner or as a dictator with previous acquisitions and decide if that works for you and the rest of your company.
Assess their objectives – This step in your due diligence can determine whether you are being packaged for a quick sale, which will in turn play a large role in the day to day operations of your business post-acquisition.
Define your objectives – An objective of cashing out versus one of providing long-term security to your employees will most likely put your company on distinctly different paths. Being sure of what you want can help to ensure that you choose the most optimal path to a liquidity event.
While each type of liquidity event for a business event will bring changes, it’s important to know in advance what those changes will involve. Only then will you be able to make a choice that matches your objectives for you, your business, and your employees for both the short and the long term.
Many businesses, especially when an initial public offering (IPO) or reverse merger has been ruled out, must make a decision to sell to either a private equity firm or to a strategic partner. Because the differences in objectives of these two types of acquirers is often quite extreme, the decision between one or the other can have a drastic effect on the operations of the business for both the short as well as the long term.
Here are 4 considerations which can reveal that selling to a strategic partner will be more beneficial than being acquired by a private equity firm:
A similarity in business objectives – If you have long term objectives for your business that are important to you, finding a strategic partnership that can help you reach them is the start of a positive union. On the flipside, if the acquiring company’s objectives are diametrically opposed to yours, such as a quick sale of profitable assets for example, look for another suitor.
The prospective partner requires the expertise of your employees – Strategic partners often make acquisitions of businesses that are complementary to theirs but operate in areas where they have no expertise. A need for your employees’ experience and knowledge can help to ensure that their jobs will be safe as opposed to subjecting them to the risk of cutbacks by a firm solely focused on the bottom line.
The due diligence process is one where the acquiring company seeks out the strengths of the business as opposed to its weaknesses – A strategic partner may have an exhaustive due diligence process but you’ll know right away whether they’re looking for strengths that can improve their operations or weaknesses that might serve as negotiating points to lower the purchase price. Be wary of a price oriented due diligence process as everything that follows will likely be about price as well.
A similarity in values beyond that of the business – While it’s true that businesses are financial concerns, what often makes them better companies are their values in terms of their integrity, their employees, society as a whole, etc. Partnering with a company that shares your values can build a synergy that is greater than the separate parts.
Lastly, having firm grasp on what is important to you will be one of the most important aspects of this process. Because your priorities will play a large role in how you select an acquiring company, make sure that the values, ideals and objectives you have set forth will be respected and acted upon by the acquiring firm. With that, you’ll have a partnership that can benefit from the synergies of a new partnership while allowing you to sleep at night as well.
If you, and possibly your investors, have decided that it’s time to pull some cash out of your business there are 4 basics options, also known as liquidity events, in which all or part of the business can be sold. Depending on the development stage and size of your business, some of these options may or may not be available and each one has advantages and disadvantages.
Here are the typical liquidity event options for a business including key characteristics:
Private sale of the company to an outside acquirer – An outside acquirer will most likely take either one of two forms; strategic investor or private equity firm. A strategic investor will make the acquisition because your business possesses technology, products/services, or a target market that complements and improves the operations and revenue potential of the acquirer. On the other hand, a private equity firm will be looking to liquidate this acquisition as soon as possible for a return on its investment.
Public offering – A public offering can occur through either an initial public offering (IPO) or a reverse merger. The requirements to quality for an IPO include minimum revenues of $1 million, shareholder equity of $15 million, or a variety of other benchmarks. Additionally, meeting requirements does not ensure an IPO as evidenced by the sum of the initial public offerings that were completed in 2012, which numbered less than 50. Reverse mergers are typically executed by smaller companies that end up trading on the pink sheets or the bulletin board, as opposed to the major exchanges. In both cases, the company will be in communication on a regular basis with new shareholders, and should make preparations for a lot more transparency to the outside world.
Sale of a division or part of the company – Much like a private sale, the acquisition of a part of the company is generally made as either a strategic or investment move. Whether this type of sale makes in large part depends on whether the part of the business that remains can function as a viable business.
Sale to the employees – In terms of a “feel good” solution, the sale of a business to management or to employees through an Employee Stock Option Plan (ESOP). This basically eliminates the sales process but also results in a lower valuation than would result from other liquidity events. In terms of a timeline, the ESOP version will probably take longer to complete, which isn’t a bad thing if the ownership isn’t in a rush to leave the business or is not in need of a lump sum payment.
In each form of liquidity event there are several advantages and disadvantages depending on the structure of the company as well as the relationship between the owners, management, and the employees. With all the variables involved, taking a long look to decide the optimal format for pulling out cash will be one of the best investments you can make, even though it will occur before you have the money in hand.
The word “certainty” doesn’t come up much in today’s weak economy. Financial service providers who claim to guarantee any specific result aren’t to be trusted, and anyone who can “accurately predict” the movements of the economy usually tends to be proven wrong in a few months time. Since the current era is quite a volatile one in terms of the global economy, traditional thinking and widely accepted axioms aren’t as helpful as they once might have been.
Dmitrij Harder understands the volatility and unpredictability of the current financial climate, and the delicate situations that many individuals and businesses currently find themselves in. While Harder doesn’t claim to have all the answers, he does guarantee customers creative and innovative thinking that encompasses a spectrum of current financial information.
Harder’s financial services have earned him a lot of respect professionally. He is known for being upfront and honest with customers, never trying to convince anyone to make a move with their money that he can’t be certain about. At a time when everyone is trying to make their best educated guess about which direction the economy will move in next, Harder’s forthright manner, hard-earned experience, and creative thinking help him stand head and shoulders above his competition.
In addition to his innovative approach to financial services, Dmitrij Harder also brings his expertise and creative ingenuity to the areas of project management and risk management. His many years of knowledge in these areas allow him to employ creative strategies as he assists customers with their financial needs.
Many businesses and customers have realized that Dmitrij Harder is the best name in his game. To stay at the top of the ladder, Harder is constantly developing himself and adding regularly to his portfolio of skills. While he pushes himself to learn more about the financial world, and gains invaluable experience, it’s unlikely that this creative financial thinker will fade anytime soon.
In today’s volatile economy, many customers are looking for someone trustworthy and reliable who can provide them with the financial services they require. It is not surprising that many of these customers have turned to Dmitrij Harder to meet these needs for their companies. With his keen business eye and understanding of financial stability, Harder has earned himself a reputation in the industry for having the right knowledge and connections to meet and exceed customers’ expectations for good financial services.
Securing good financial services is one of the most crucial steps to achieving success for today’s competitive businesses. Harder has long recognized that it is critical to provide people with services that are reliable and trustworthy. After seeing so many clients burned by his competition (who often like to cut corners and take shortcuts), Harder determined to offer a service that people would be able to trust.
In addition to offering financial services, Dmitrij Harder also branches out into the fields of risk management and project management. Differentiating himself from the competition again, Harder is able to manage these three areas of his career, and excel equally in providing all of these services for any business. His career has enjoyed great success because of this ability to offer multiple services to the same clients.
In his own experience, Dmitrij Harder has noticed that when clients find they can rely on one person for strong financial services, they are more than willing to use that same service for their other business needs. Even if a client chooses to only use Harder’s financial services, he is of course still able to bring in his outside knowledge from the risk management field to help advise them on making the right decisions. Harder is committed to delivering first class financial services, and he consistently exceeds his clients’ expectations.
Many risk managers approach the position as if it is all about minimizing risk or effectively distributing potential risk. While Dmitrij Harder agrees, he also sees his position as a risk manager as something more than strategically distributing risk. He sees good risk management as an opportunity for a conversation that raises challenging questions: how can we do this better? Why are we committed to these processes and these technologies?
Questions like these help to establish a basis for further progress, but are only the beginning. Looking at risk management solely as a way to minimize financial risks is naïve and unproductive for the long term, if a business hopes to make gains. Good risk management means predicting what future changes might take place in your industry, and distilling precisely what you can do now to prepare for them, before anyone else makes a move.
Perhaps it is Harder’s skill and experience in project management and other financial services that make him a challenging and creative force to be reckoned with, in the industry of risk management. Regardless, his techniques are working, and they often draw customers back time and again for his unparalleled creative and honest financial services.
The risk management industry is sure to soon see a shift toward doing business the way that Dmitrij Harder does it now. However, by the time the industry shifts, Harder will most likely already be well established at the forefront of his industry’s game. No doubt his many customers know this, and are thus committed to fulfilling as many of their financial needs as possible with him.
Dmitrij Harder is, on the whole, excited to see the risk management industry undergo these necessary adaptations as the global economy continues to develop in unexpected ways. For Harder, the volatility, while at times unnerving, also makes for a more interesting game. As a risk manager, it’s the excitement and the risk involved in the industry that keeps him going!
Dmitrij Harder has seen the field of project management undergo serious changes in his many years as a project manager. While certain skills like clear communication and effective deployment will never go out of style, the increased need for creative thinking and innovation has become a more important issue in recent years.
With a volatile and unpredictable economy, as there is today, project management isn’t quite as cut-and-dry an industry as it once was. In decades past, traditional thinking and adherence to conventional wisdom was the norm. Effective project management now requires more creative thinking that incorporates knowledge from a variety of sources. Spread sheets and past performance charts no longer guarantee the same results that they used to.
Project managers on the whole are finding the need to adapt their approach in order to deliver the most effective results for customers’ projects. Dmitrij Harder especially has excelled in rising to meet the challenge presented by this forced change, since his proclivity for innovation makes it easier to think of new approaches.
In addition to being a skilled creative thinker, Dmitrij Harder is also experienced in risk management and other financial services. Harder’s customers have long appreciated his ability to bring more to the table than just good project management skills. After all, good project management skills are the bare minimum requirement for many businesses today.
Harder enjoys working with businesses that are looking for something more, because he believes every project deserves and requires that extra touch of creative energy. Because it allows him to do the kind of work he loves most, Harder particularly enjoys working with customers who want and expect excellence in their results.
As the future becomes continually less certain in today’s economy, Harder remains on the cutting edge of what the financial services industry is sure to become soon. His customers already realize this, and appreciate his unparalleled service as a result.
Dealing professionally for many years in the risk management industry, Dmitrij Harder has earned himself a reputation for his extensive knowledge of project management. The right project management can make or break any project’s eventual success; this is why businesses are fastidious when choosing someone to lead their projects to completion. It is essential to have clear and defined goals in mind at every step of the process. Harder, in his career as a project manager, has earned a reputation for having the necessary foresight to easily see the necessary steps for success.
Harder approaches each project he oversees with all of his accumulated past experiences to assist him. When combined with an understanding of the unique requirements of each project, the knowledge gained from previous work can eliminate potential problems before they arise. Each project is different for Harder, so a tailored approach most often leads to success. What worked in the past can usually be applied in some way, but each project offers its own challenges that require creative and innovative thinking.
It is Harder’s creativity and innovation that has garnered him respect in his industry. Approaching each project with the fresh eyes of an innovator, as well as the foreknowledge of an experienced manager, has produced many positive results both for him and his clients. He is known for giving clients exactly what they need time after time, by recognizing their unique requirements and delivering unparalleled service.
It is because of his long track record of success that many businesses looking for a project manager have come to Dmitrij Harder as an obvious first choice. Because his knowledge is not limited to the field of management only, he brings more to the table (particularly in terms of financial planning) than the competition.