There is a fundamental conflict between new venture and mature company management requirements. As an enterprise evolves, the focus for success shifts from sensing and seizing opportunity to protecting and utilizing the resources that have been acquired. In surviving companies, management practices change to accommodate this changing need. The conflict arises when the mature company attempts to initiate internal new venture activities. Application of mature company practices to management of new corporate ventures is not only inappropriate, but breeds failure.

To succeed with new ventures, top corporate management must first understand the inherent differences in management needs for new ventures versus the mature organization, and must then adapt a pluralistic management style that accommodates both needs. This paper examines the rationale for ten “establishment” practices and the adverse effects they can have on new ventures. From this analysis, alternative “entrepreneurial” management practices are recommended.

The ten management practices examined are:
(1) Enforce procedures to avoid mistakes;
(2) Manage resources for efficiency and ROI;
(3) Control against plan;
(4) Plan long term;
(5) Manage functionally;
(6) Avoid moves that risk the base business;
(7) Protect the base business at all costs;
(8) Judge new steps from prior experience;
(9) Compensate uniformly; and
(10) Promote compatible individuals.

related/bookmark it

(more…)

M&A can become a cat-and-mouse game as companies attempt to analyze (or safeguard) sensitive data.

Like many entrepreneurial start-ups, Andara Life Sciences had a secret to protect. Its provisional, nonpublic patent filings covered the Andara Oscillating Field Stimulator Device, part of a system for regenerating damaged spinal-cord tissue. “It was our most important asset,” says Mark Carney, one of Andara’s founders.

In 2005, when the private, Indianapolis-based company was considering options that included potential buyers, guarding that asset took on a whole new dimension. Andara Life Sciences, still less than a year old, did not want to reveal any trade secrets to would-be buyers who might walk away from the deal.

“There were times we thought this would just not happen,” says Kimi Iguchi, vice president of finance at Foxborough, Massachusetts-based Cyberkinetics Neurotechnology Systems, which eventually bought Andara. “That is their jewel, and they wanted to protect it until we were very close.” (Cyberkinetics recently made front-page news with its trial of brain implants that allow paralyzed patients to control computer cursors with their thoughts.)

Suggestions for guarding sensitive data during M&A negotiations

* Whether a buyer or seller, insist on strong confidentiality agreements with the other side.
* Consider establishing a breakup fee to add emphasis to the need for secrecy.
* Use third parties and secure data rooms, either actual or virtual, to share proprietary data with less risk.
* Impress upon employees working on the deal the need for confidentiality.
* Disguise the target’s name from prying eyes by using a code name.
* Keep the number of people in-the-know as small as possible.

related/bookmark it

(more…)

The BSE benchmark index, Sensex continues to trade on a firm note above 17,000 as sustained buying activity is witnessed in heavyweights.

BSE Sensex is trading at 17,030.09, up 108.70 points, while NSE Nifty is trading at 4,972.85, up 32.35 points (11.25 a.m).

The BSE Midcap rose 0.30% and BSE Smallcap rose 0.60%.

Out of the total 2,526 stocks traded at the BSE, 1389 advanced, 1063 declined while 74 remained unchanged.

Amongst sectoral indices, BSE Auto rose 0.70%, BSE IT rose 2.31%, while BSE Realty declined 0.77% and BSE Bankex dropped 0.20%.

Key gainers at the Sensex include Reliance Energy, which surged 4.56% to touch Rs 1073, followed by ONGC which soared 3.99% to Rs 974.00 and ACC rose 2.78% to Rs 1,188.10.
Infosys, Hindalco, Cipla, Satyam, Tata Steel, M&M and Maruti also moved up.

Laggards at the BSE were HUL, which declined 1.66% to Rs 221.50, HDFC, decreased 0.98% to Rs 2,452.75 and Ambuja Cement dipped 0.91% to Rs 146.30.
Bajaj Auto, NTPC, Bharti Airtel, Grasim, ICICI Bank and HDFC Bank also slipped.

related/bookmark it

by Dee Power

Preparation, Positioning, and Perseverance.

Prepare yourself and your company by developing a strong business model and a solid business plan.

Position your search for capital by researching what kind of capital is appropriate for your company, what venture capital firms have the investment parameters that match your company, by stage, amount of capital, industry, and geographic location.

And finally persevere, don’t give up.

Preparation:

Develop a clear, concise, realistic business plan that gets the reader excited about the opportunity your company presents. The plan must not only cover what you are going to do but how you are going to do it.

Hone your market research and analysis skills. Systematically gather information on your competitors, so that you can make a credible case for why your product/service offering will be better.

Let other experienced business people read and critique your plan, testing it for clarity and reasonableness. Never send a first draft to the venture capitalists. Proofread it a number of times.

Put together a strong, experienced management team, with people who have been successful in the past.

Positioning:

Research the investment criteria of the venture capitalists to ensure that what you offer is what they are looking for.

Use every method you can think of to reach potential investors.

See if you can find someone that knows the VC and can make a personal referral.

But don’t rely simply on referrals, contact the venture capitalists directly yourself. Our survey showed that direct contact by the entrepreneur was mentioned by 30% of venture capitalists as the way they most commonly found the deals they invested in.

related/bookmark it
(more…)

MUMBAI: If you plan to stay invested in equities with at least a two-year horizon, fasten your seat belt and pay no attention to the occasional air pockets that the market is likely to run into over the next one year. But if you believe frequent churning of portfolio is the best way to maximise returns, think again.

With Sensex breaking past 1000-point milestones with blistering pace, is it time to rejoice or be cautious? To crystal gaze on what investors should expect in the near term, ET held a Roundtable of some of the biggest names on Dalal Street.

The participants were Rakesh Jhunjhunwala, the reigning Big Bull of Dalal Street, astute deal maker Vallabh Bhanshali of Enam Securities, star fund manager Nilesh Shah of ICICI Prudential, veteran BSE broker Parag Parikh, Narayan Ramachandran, MD and CEO of Morgan Stanley, Andrew Holland, managing director of DSP Merrill Lynch and Nirmal Jain, CMD of India Infoline.

The session was chaired by Gul Tekchandani, a star fund manager during the late 90s, who now is pursuing his interests in the real estate sector. Their message is clear: The India growth story still has enough steam left, but be prepared for some testing times and lower returns from your equity holdings over the next one year.

related/bookmark it

(more…)

Ask any financial planner or insurance agent what risk could be called “the forgotten risk,” and, chances are, the answer will be disability. Their clients often come in the door questioning whether they have too little, too much or the right kind of life insurance, but rarely have they thought about how they could survive financially with no earned income.

In reality, disability insurance is as important as (and in some cases, even more important than) life insurance.

FORTY-FIVE-YEAR-OLD ROBERT SCHENKER of Woodbury, N.Y., is the breadwinner of his family. He’s also a Type I diabetic and understands that this gives him a higher-than-average chance of becoming disabled and unable to work. That’s why after recently meeting with his financial planner, he decided to supplement his employer’s disability coverage with an additional long-term disability insurance policy. “I have two young children, a wife to support and a house to maintain,” says Schenker. “I wanted to make sure if there is an incident that there is ample financial protection for them and myself.”

Let’s face it: Nobody likes to think about what life would look like should disability strike. But the reality is one third of all Americans between the ages 35 and 65 will become disabled for more than 90 days, according to the American Council of Life Insurers. One in seven workers will be disabled for more than five years. And while many people think that disabilities are typically caused by freak accidents, the majority of long-term absences are actually due to illnesses, such as cancer and heart disease. The loss of income can be so devastating that 46% of all home foreclosures are caused by a disability, according to the U.S. Department of Housing and Urban Development.

Disability insurance replaces a portion of your income if you become disabled and are no longer able to work. A typical group plan offered by an employer will replace up to 60% of your salary. Supplemental plans and individual policies will often cover up to 70% or 80%. (No plan will cover all of your salary for fear you will have little or no incentive to get back to work.) Benefits typically last for a set number of years (say five years) or until you reach retirement age. (Benefits typically stop around retirement age since once you retire, you would no longer be dependent on the income you generated by working, anyway.) If you pay the premium out-of-pocket — meaning your employer doesn’t cover the tab — benefits are tax free.

related/bookmark it

(more…)