In a few stories
I would like to tell you about three key moments in my professional life, illustrating them with examples, and tell you a little more about my job.
How my clients made me an entrepreneur
After working in M&A consulting for Crédit Lyonnais and Deutsche Handelsbank in Germany and Deloitte in France, I joined Arthur Andersen in 2000. I start sourcing my own assignments. With each client, we define precise objectives on how to organize the negotiation so that the operation is carried out under good conditions. Contributing to the success of complex operations becomes my true profession.
The quality of execution by my teams is problematic. I spend a lot of time coaching them in order to keep the commitments made with the clients. The more my requirements increase, the more complex the management of juniors becomes. Under no circumstances do I want an operation to fail or produce a half-hearted result.
With the acquisition of Arthur Andersen France by Ernst & Young, the Corporate Finance department is destabilized. I feel close to the entrepreneurs I advise. Working with them has transformed my professional goals. In 2004, I create Genaxia Finance in order to put my know-how as a deal maker at the service of my clients.
How the success of my clients’ operations became my differentiation angle
I have been scuba diving since I was 18 years old. Diving is an immersion in another fascinating world where everything is different: the feeling of weightlessness, the enveloping water, the more indistinct and intense sounds, the reduced vision that seeks points of support, the breathing and heart rate that decrease while moving in a three-dimensional universe.
Desaturation accidents, barotraumatic accidents: the unexpected in diving often have a fatal outcome.
I become a scuba diving instructor to help novices and experienced divers discover or rediscover the ocean.
I anticipate their reactions, evaluate their abilities, help them progress technically, and allow them to get the most out of each sea trip, in complete safety.
Just like the fun in diving, winning in M&A is the reward for careful preparation to eliminate risk. You don’t know if you’ve succeeded in an M&A deal until you’ve implemented it. Let me give you a well-known example, the acquisition of Nokia by Windows.
In 2007, Apple launches the iPhone.
In 2008, the first smartphones are available on Android.
In 2009, Windows starts its mobile marketplace, but has difficulties to catch up with its two competitors: Android is free and few hardware manufacturers opt for the Windows operating system.
The stakes are high: smartphones are replacing the consumer computer market!
In 2013, Nokia controls more than 90% of the Windows-based smartphone market. The Finnish manufacturer is considering moving to Android. In order not to be eliminated from a considerable market, Microsoft acquires Nokia for US$ 13 billion.
However, this operation does not manage to reverse the trend. Application developers prefer IOS and Android to Windows. The cultural differences between the two companies end up destabilizing Nokia. In 2015, Windows depreciates its Nokia shares by US$ 7.6 billion. What a resounding failure!
Negotiating a deal under the right conditions contributes half to its success. Transforming the trial is the real risk. The know-how and methods to effectively succeed in an M&A transaction have become my angle of differentiation.
How being a deal maker for my clients made me grow professionally
I am passionate about ethology (the study of animal behavior). The state of research in inter-species communication makes it possible to envisage the development of applications addressing the vast market of pets. Applications already exist to interpret the vocalizations of other species. But they are not very effective and are not based on serious scientific research. It seems possible to me to develop a new offer without direct competitors.
Tempted, I evaluate the arguments for and against the project. For: a large potential market, little capital required, intellectual property prospects. Against: unfinished research, partnerships with researchers whose agenda and constraints are not those of an entrepreneurial project.
I am in the same situation as my clients facing an M&A transaction. To succeed in a transaction, you have to identify the key success factors and obtain them in the negotiation. Let me illustrate this with a second example of a famous transaction, that of Marvel Entertainment by Walt Disney Studios.
In 2009, the Walt Disney Company acquires Marvel Entertainment for US$ 4 billion, a 29% premium over the last stock price.
However, Marvel is experiencing financing problems.
The company was forced to concede the distribution and sometimes even production rights of its most emblematic superheroes (Spider Man, the X-men, the Fantastic 4, Iron Man). These rights are held by powerful competitors: Paramount Pictures, Sony Pictures Entertainment and 20th Century Fox. The potential of lesser-known Marvel superheroes is uncertain, as is the complementarity of the Disney and Marvel universes, with their very distinct images.
The Walt Disney Company builds its acquisition of Marvel by anticipating to take over the rights granted to third parties and to multiply the production of films by increased human and financial means.
10 years later, in 2019, the Marvel acquisition has generated more than US$ 18 billion in box office receipts. What an extraordinary success!
Why is getting to the point key to a successful M&A deal?
When I advise my clients, I immerse myself in their strategy so that together we have a realistic vision of the conditions under which an M&A transaction would achieve their objectives.
We analyze the global impact of the transaction, i.e. its strategic, financial, shareholder, managerial and organizational consequences.
Together we draw the roadmap of the negotiation and we organize the resources allowing us to reach each step.
Throughout the negotiation of the transaction, we prepare its effective implementation (integration of the target’s teams and resources/processes; “task team” to evaluate, implement and monitor synergies; anticipation of KPIs, operational risks and financing risks in the business plan; communication plan with customers/suppliers; coordination of the hybrid manager/consultant team, etc.).
I leave nothing to chance. Whether it is the identification of targets, their approach, the presentation of the project and financial information, the modeling of the business plan and the set-up, the coaching of the management, the management of the team of managers and consultants, the preparation and the conduct of due diligences…
We form a team. I generally coordinate the negotiation, in close association with my clients. At the same time, I am involved, with the management, in the preparation of the day after the closing. My mission is to form the link between the negotiation of the transaction and its implementation by the management.
Do you think this methodology would have prevented the failure of Windows in its acquisition of Nokia?