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Is Microsoft a Generous Acquiror?

Microsoft has a long history of paying very high premiums for companies it wishes to acquire. According to Dealogic, Microsoft's average one-day premium for companies it acquired since 2000 was 43% compared an average premium for technology acquisitions of 25% over the same period of time.

Microsoft offered Yahoo 61% premium a few weeks ago. In 2007, Microsoft paid a 85% one-day premium for aQuantive. Microsoft paid a 42% premium for Norway's Fast Search and Transfer ASA. In 2001, Microsoft paid a 77% premium for Great Plains Software.

Unless your company has the financial power of Microsoft, you will need to be a savvier and more strategic buyer. Check out The Business Development Academy's courses on Financing Acquisitions and Negotiations.

The Secret of Einstein's Fame

Albert Einstein achieved rock star fame during his lifetime. Even today, Einstein is by far the most well-known physicist. The Baby Einstein Company was acquired for $150 million by Disney. Hebrew University in Jerusalem earns tremendous royalties just by licensing his name.

There is no question that Albert Einstein was a genius. He was also active in politics. He was offered the presidency of Israel but declined the nomination. He spoke so ardently against the Nazi's that they placed a $5,000 bounty on his head. He campaigned against the development of the atomic bomb. He proved his loyalty to his adopted country by performing mathematical calculations on behalf of the US Navy to determine the optimum placing of mines in the Pacific Ocean. His wit also won the hearts of the media.

However, there were and are today many brilliant physicists. If one were to peer into many of their lives, one would find that many of them devoted considerable time and energy advancing philanthropic and honorable causes. Some of them were and are telegenic, attractive and accomplished wordsmiths.

So why was and is Einstein so revered? Is it more due to Einstein's intelligence or his hair? This is a deadly serious question. Was the incremental advantage that thrust Einstein into super stardom his superior intellect over the other Nobel-laureate physicists or his electrified-looking halo of hair?

It might very well be because of his hair. There may only be 1,000 people on the face of the earth who are intelligent enough to debate whether Einstein's contributions to physics exceeded those of the likes of Max Plank, Sir Isaac Newton or James Clerk Maxwell or any of the other scores of Nobel Laureates for Physics.

As many as 9,000 people attended Einstein's lectures which often dragged on for three or four hours. Most of us would be lost after listening to a few sentences. Even if we had understood an entire three hour lecture, Einstein himself said repeatedly it would take him three days to explain the Theory of Relativity. Moreover, Einstein delivered many of his presentations to English speaking audiences in his native German and quite often there was no translation. The fact that the vast majority of the people who attended Einstein's lectures had absolutely no idea what he was talking about, in no way diminished his appeal.

Einstein's hair, crumpled suits and German accent made him look and sound like a genius. The image that he projected propelled him into eternal fame.

These are some of the kinds of episodes that are discussed in our new book, The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results.

The Power of Incremental Advantage documents how one bullet, one vote, one second, one word, and one inch have shaped history and changed the world.

The Power of Incremental Advantage is replete with strategies, tactics and practical leadership lessons to help you stay one step ahead of your closest competitors. These leadership lessons are supported by well-researched historical examples.

Trends in Research & Development Investments

According to recent research published by Battelle Memorial Institute, total spending on US R&D is projected to rise about 3% to $367 billion in 2008 from $355 billion in 2007. After accounting for inflation, the growth rate would be about 3.7%.

This does not mean that the quality of research will suffer. Research efforts must become more efficient just as every other department in Corporate America must become more efficient. In efforts to become more efficient, many American companies are offshoring their R&D efforts, especially by tapping into research being conducted in less expensive countries. Also, there are companies such as NineSigma that allow companies to tap into networks of researchers around the world.

Separately, China spends more on R&D than any other country, except for the US. China has been increasing its R&D spending by 15% to 20% each year.

The management of research & development and intellectual property is the focus of many seminars offered by The Business Development Academy. Visit www.bdacademy.com.

Financing Mergers & Acquisitions

The credit crisis is impeding mergers and acquisitions. One reason is that the corporate loans used to finance buyouts are languishing in the secondary markets. For instance, loans of Freescale Semiconductor are trading at a 15.5% discount of their original value and loans used to finance Sam Zell's acquisition of Tribune Co. are trading at a 26% discount. Investors have little incentive to buy new loans (issued for purposes of making acquisitions) unless they are sold at steep discounts.
 
Other reasons why demand for buyout-related loans is waning include that lower interest rates provide less return potential for investors in such loans and the fact that defaults on leveraged loans is already rising. Already in 2008, nine companies have defaulted on leveraged loans, more than the two defaults during all of 2007.

Also, as The Wall Street Journal pointed out, hedge funds are being pushed out of the market as facilities called total return swaps unwind. Total return swaps are set up by banks for hedge funds and other investors to buy loans with borrowed money. As the value of the loans declines, provisions in these swap agreements are being triggered that act like margin calls to unwind the contracts.

A further concern with the secondary markets difficulty in digesting corporate loans is that many companies purchased these loans and placed them on their balance sheets under marketable securities. While the assumption was that these securities are near cash equivalents, their discounts in the secondary markets may cause a wide array of companies (not just financial firms) to take write-downs.

These are some of the issues that will be discussed at The Business Development Academy's Mergers & Acquisitions Seminars. One seminar - Financing Mergers & Acquisitions - will hit these issues dead on. For more information, please visit www.bdacademy.com.

Democratic Presidential Candidates' Delegate Counts are Extremely Close

As of mid-February, the Democratic Presidential candidates have extremely close delegate counts. According to the Associated Press, Hillary Clinton has 1095 delegates to Barack Obama's 1070. CNN has Clinton ahead with 1100 to Obama's 1039.

It is important to realize that many elections are decided by just a handful of voters. For instance:

• In the 2000 Presidential Election, President Bush’s margin of victory over Al Gore was 154 votes in Florida, which enabled the former to edge out the latter with four electoral votes. In the waning months of 2000, the fate of the nation, if not the world, literally hung on a few dangling chads.

• One vote elected Rutherford B. Hayes to the presidency in 1876, and the man in the Electoral College who cast that vote was an Indiana Congressman who himself was elected by one vote.

• There was extensive debate about impeaching President Andrew Johnson in the Senate during ten weeks, from March 5 to May 16, 1868. In the end, President escaped conviction by a lone vote.

• One electoral vote kept Aaron Burr from becoming President. That one vote elected Thomas Jefferson in 1800.

These are some of the kinds of episodes that are discussed in our new book, The Power of Incremental Advantage: How Incremental Improvements Produce Dramatically Disproportionate Results.

The Power of Incremental Advantage documents how one bullet, one vote, one second, one word, and one inch have shaped history and changed the world.

The Power of Incremental Advantage is replete with strategies, tactics and practical leadership lessons to help you stay one step ahead of your closest competitors. These leadership lessons are supported by well-researched historical examples.