Let the laymen set the deal!

Once in awhile, it’s nice to see your advice echoed in the halls from someone like Warren Buffett. Since my early investment and venture capital days, I have promoted the concept of a simple “terms sheet” to set down the deal terms between the companies involved, making sure that the businessmen understand the business issues first.

Your attorneys serve an valuable role but it’s invaluable for both sides to be very clear about the business objectives (more…)

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Vol. 62: Strategic Finance Fundamentals: It’s time!

“If I am through learning, I am through.”– John Wooden

Some of you will remember – back in the day – the E. F. Hutton commercials that intoned, “When E.F. Hutton speaks, people listen.” (Some of you are probably wondering – who is E.F. Hutton in the first place?) These days, the Sage of Omaha has taken their place and has the ear of many. When I finished re-reading Warren Buffett’s Annual Letter to Shareholders, it resonated with similar messages in a number of recent articles.

What is growth?

From a Wall Street Journal article on March 25 discussing Conoco/Phillips’ future plans: “We asked ourselves, ‘What is growth?’” an executive said. “Growth could be viewed as just growing absolute volumes, but we felt that in this challenging environment what’s really important is to grow the value of the company.”

Or this one, from an article in the April 5 edition of Business Week about the Sears/K-Mart merger: “Simplistic analyses … ignore the fact that negative or below-market returns on invested capital are as harmful to creditors as to shareholders.”

Finally, in Warren Buffett’s shareholder letter, (more…)

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Taxachusetts? Not this time!

As you know, Scott Brown, a Republican, defeated the Democratic candidate to fill Sen. Ted Kennedy’s U.S. Senate seat, a stunning reversal of Massachusetts trends of the last 50 years, for a seat that the Dems thought they couldn’t lose.

While there is certain to be a lot of political fallout and spin doctors massaging the message, it’s hard to argue that the health care reform razzle-dazzle isn’t part of it. As I’ve said before, I doubt that there’s a single American, let alone a U.S. Senator, who could even tell you, clearly and plainly, what the bill looks like today.

You can find other articles in Sword Tips discussing some of these provisions, and the lack of cost-saving provisions. I think what Americans resent is the enormous resources devoted to an omnibus bill of gargantuan proportions, unread by virtually all, that has jumped ahead of job creation and economic stability for so many Americans. (more…)

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