Showing posts from April, 2020

Analogies between Tuck-in M&A and portfolio investing returns

In portfolio investing like venture capital or private equity, you are balancing risk versus reward to obtain a portfolio or fund return.   Some deals may be a home run and some may be a single or worse a zero.   Similarly in M&A you are balancing risk versus reward.  Customer or book acquisition where you acquire only the customers that transition to your platform is low risk and accretive but not huge rewards from one transaction.  A tuck-in acquisition that dramatically improves your product or provides a best of breed adjacent solution to cross-sell maybe be higher risk but offers much higher reward. Auren Hoffman wrote a thought-provoking post called M&A is a Power Law .  He provides great commentary of grand slam home run acquisitions like Google buying YouTube, Facebook buying Instagram and Priceline buying   These are legendary acquisitions and the best of serial acquirers like Google, Facebook, and Priceline.  For example, according to CB insights Googl

Conducting Layoffs

Having been a leader through many layoffs in my career (not surprising since I spent the first part of my career at GE with "Neutron Jack" Welsh ) and they always suck.   At times I have felt like Ryan Bingham in the movie Up in the Air . (except unlike him layoffs had a high personal toll on me). The folks at Andreesen Horowitz put out a timely post on Planning and Managing Layoffs . It is an excellent resource and a great checklist for planning and conducting reductions.   However, the post doesn't fully communicate the amount that layoffs suck and the level of emotional impact both on the affected person and the manager forced to conduct the layoff.  During the crash of 2000 and 2001, I was a leader in a firm that went through more than five rounds of layoffs.   Yes, we could have cut deeper earlier but the downturn had repeated waves of economic impact with some geographies continuing to produce and while other geographies were negatively impacted early.