merger, acquisition, synergy, time's up, blog, Toby Elwin

Time’s up for merger and acquisition synergy

The mergers and acquisitions world sprinkles potential deals with a bit of pixie dust called synergy. Synergy is neither rational, functional, nor logical.

If HR used the word synergy in an accounting meeting? Laughed out of the room. If HR or human capital used the word synergy in a corporate finance discussion? The time value of money, that is rational. What will it cost? What return will it realize? When will it realize that return? All rational.

Synergy? Synergy is more a pagan fairy than rational way to make a deal.

human capital risk, cover, Toby Elwin, blog, beta, investment

Human capital beta is investment risk beta

Human capital management is motivation management.  No matter the IQ of an individual or the collected experience of the team without motivation there is opportunity lost. Human capital risk is real, but mainly divorced from analytic and assessment rigor. There is something missing in how to evaluate a a firm opportunity risk. To maximize return on investment you need to maximize return on involvement. I’ve worked in post-merger integration environments for more than 15 years and until you account for the talent you acquire, you have not accounted for risk. Starting in 2007 I began to think about how to evaluate talent and human capital risk in initial assessment.  This deck was a working draft of my thoughts with the objective to sit in a room and deliver a true, front-end human capital assessment to an investor. You can download Adobe Acrobat or PowerPoint version just …

emotional intelligence, what we know, book, Toby Elwin, blog

Recap: Emotional Intelligence

Social intelligence, social competence, emotional competence, interpersonal intelligence, intrapersonal intelligence, emotional adaptiveness, emotional quotient, emotional intelligence, EQ, and EI. There are many schools and many thoughts about what is and is not emotional intelligence.  And just as many tools that attempt to measure, monitor, and predict the impact of emotional intelligence. For me, Emotional Intelligence boils down to: the way I motivate myself, the way I motivate others, and focusing my intentions to result in correct consequences If being smart or a high IQ was all that mattered than only those with the highest IQ would ascend to the C-level or highest public-sector positions.  Every valedictorian would be successful. There is something more to knowledge.  Something more than being a valedictorian to get along and to succeed.  This something includes self-awareness and relationship awareness.  Below are a series of blogs I’ve …

goodwill, human capital, risk, Toby Elwin, blog

Discounted risk is human capital risk

Many private equity and venture capital firms claim to rely on the quality of entrepreneur to determine funding. But rarely is this human “quality” represented in measurable, comparable assessments at least as measurable as weighted average cost of capital, discounted cash flow, capital asset pricing model, risk-adjusted rate of return, and other abstract financial models. Human capital is the only asset that is not tangibly owned, however human capital risk is very tangible: Compliance – Financial or reputation damage to the organization due to failures to meet legal or regulatory requirements; Productivity – Loss of productivity or output due to under-skilled or under-motivated employees; or an organizational culture that does not encourage discretionary effort (the extra contribution over and above required to keep the boss off your back) from employees; and Growth – Failing to maximize organizational capability or to identify and achieve …

In review: Organization sabotage and the butterfly effect

July 2010 in review. A roundup of blogs from the previous month: Organization sabotage and the butterfly effect — As a manager, running a team takes more than lining people up and pointing to the finish line.  People are all not only motivated by salary.  A leader or a manager may feel sabotaged when their team does not deliver. How do you turn sabotage into development then turn development into opportunity?  People and change are not linear, the path from an intervention to the future state looks more like the flight of a butterfly, than a rocket. Scope or: how to manage projects for organization success, part 2 — Managing a project is managing organization competitive advantage.  When scope changes, cost changes:  the cost of missing a delivery date, the cost of budget overrun, the cost of delivering less than …

venture capital, return, private equity, Toby Elwin, Harvard Business Review

Venture Capital and the descent into irrelevance

The bigger the risk, the bigger the reward. Elemental finance: you assume the amount of risk suitable for an expected payoff. You assume bigger risk and its bigger payoff with the full caveat that there is an equally big downside loss that could happen. Invest in a money market and get slow, steady, decimal-point-% returns; you sleep well knowing your risk is low and what to expect. Invest in emerging markets, a start up, or unproven technology with wildly fluctuating uncertainty and huge range of possible returns; you get potential sleepless nights worrying about losing your entire investment or planning a safe harbor for your potential windfall. If venture capital (VC) is to assume its traditional place as the fuel for innovation than a 2% average quarterly return from 1981-2009, as well as a glut of investor money sitting around …

budapest, boston, innovation, Hungary, technology, investment, blog, Toby Elwin

Innovation Boston and Budapest, or Dirty Water and the Blue Danube

13 years offers a great opportunity to revisit most relationships.  At first blush, Boston and Budapest seem to have little to share or offer each in a study on innovation.  However, both share unique innovation environments that reveal themselves upon further review. I am a Boston native and, after my undergraduate degree from Berklee College of Music, Boston is where I started my marketing career to build experience for an MBA program.  Top MBA programs want students with practical experience, so I invested in practical experience (outlined in my CSI Music Industry, Part 1: The Crime Scene blog) with this goal in mind. In 1997 I left for an opportunity to work Asia. After some time in China I felt, how can I go back to the U.S. for an MBA to study business with people who never left the U.S.? This changed my MBA goals …

Compromise When Hiring, Bugs, Yosemite

Why Startups Should ALWAYS Compromise When Hiring? — Never!

Reading a blog on the venture capital website Start Up Hire called: Should Startups Compromise When Hiring? I found a reference to a blog Dharmesh Shah, Chief Technology Officer & Founder of Hubspot* and, wrote, “Why Startups Should ALWAYS Compromise When Hiring?”. I posted a comment to the blog as I felt Start Up Hire’s blog and Dharmesh Shah’s blog both have valid points, but neither blog strikes a talent management, financial case. I post the thread here as I found it relevant to my last blog: The VC’s Missing Formula: Human Capital Discounted Cash Flow. Below, you first see the Start Up Hire blog [initalic], then Dharmesh Shah’s blog [in blue text], and finally, my comment follows. From Start Up Hire’s, Team Building Blog, page:   Dharmesh Shah shared some thoughtful insights recently on “Why Startups Should ALWAYS …

VC’s missing formula, discounted cash flow, human capital, alchemy,

The VC’s missing formula: human capital discounted cash flow

Accounting assigns of assets and liabilities and financial management’s current or pro forma valuation both rely on art and interpretation more than any professional standard, science, or law. What valuation models measure human capital ability to meet financial and strategic business goals? What formulas are used to measure human capital contribution to profits? What are the human capital risk factors you justify when you build your financial statements and projections? Organization valuation usually involves four areas: Physical capital, Financial capital, Intellectual capital, and Human capital Both accounting and financial management start with familiar industry formulas to measure physical, financial, and intellectual capital. The departure from formula comes with asset classification and subjectivity of inputs. You most often witness this in the beta, or the numerical representation of risk, used in the discounted cash flow formulas on glitzy, initial public offering, road shows. …