Merger & acquisition, The motive, 5 Trends after Coronavirus, Less doing & Map your cash
12th April 2020 Evolution Partners Newsletter
“The greatest shortcoming of the human race is our inability to understand the exponential function.” – Albert Bartlett
Hope you’re Thriving!
People all over the world are beginning to get used to the situation they are in. The social distancing, working from home (if working at all), the quarantine, the limited supply of some goods and their minds have dealt with the situation, and are now thinking what happens next. How long will the quarantine go for and what should we do next?
The answer is something that no one knows. But we had an interesting insight this week when the Australian Government released the data modelling they have been using to manage the crisis. And their efforts seem to be working.
This is the graph that the Australian Prime Minister and the Chief Medical Officer revealed at a press conference a couple of days ago. In the bottom right corner, you can see the light blue, dark blue and orange graph. Of course in Australia, we are subject to all three (Quarantine Isolation & social distancing), meaning the Government is applying the orange approach with a focus to ensure that 100% of people who need an ICU bed can access one. Importantly, however, the modelling shows that using this plan they anticipate the virus curve will peak 43 weeks after the beginning of the outbreak, and go back to normal around 60 weeks after the outbreak. At this stage, I think there are promising signs that instead the virus might be controlled in the next 2-3 months in Australia and we will go back to a mildly quarantined normal, but only time will tell.
During this time some things are growing and others are slowing, and below are two interesting takes on what is happening. First is this graphic from visual capitalist showing the products which are growing the most, and those that are slowing the most. I found it interesting that bread machines were number two!
Next is a list of the current product and service growth opportunities from virtual assistant provider Brad Stevens. Some of the things are obvious and the link to book a meeting to chat about each one is a bit too sales-driven for my liking, but there are some interesting ideas and insights as we all begin to look forward. And as we begin to look forward, I’ve also written a blog post about the 5 trends post coronavirus with details below.
One of the big things that will happen in the next 3-6 months is an enormous amount of merger and acquisition activity as smaller companies with weakened balance sheets that offer strategic value are acquired or merge with larger organisations. Larger organisations, who typically have stronger balance sheets or the ability to access funding capital are receiving advice from the big consulting houses such as Bain or McKinsey right now about how to increase their market share in this pandemic. As they begin to map their markets, expect unsolicited enquiries to begin after they have completed their strategic market analysis, and can see where the best opportunities lie — say 1-2 months. This all means that if your organisation has strategic potential to a larger organisation, the time to plan and arrange your business in the best possible light for these organisations is now. If you believe you’re a fit, reply to this email and I can give you a personal introduction to one of the best international strategic M&A firms who specialise in helping you position your business in the best light and can connect you to potential purchasers.
I’m currently reading a book called The Motive by Pat Lencioni and wanted to share a specific takeaway from it with you. Briefly, The Motive is about the two different types of motivation that CEOs have to perform that role. Some see it as the beginning of a reward, where they have earned the right to not do the hard things, and others see it as a duty, where they need to really begin to do the hard things. Here’s the takeaway I found interesting.
“Things I avoided when I was a bad CEO
1. Running great meetings
2. Managing my executive team
3. Managing my executives individually
4. Having difficult conversations with people
5. Constantly communicating and repeating key messages to employees
The 5 omissions of reward centered leaders
1. Developing the leadership team
2. Managing subordinates (and making them manage theirs)
3. Having difficult and uncomfortable conversations
4. Running great team meetings
5. Communicating constantly and repetitively to employees”
It’s not the same as the roles of a CEO, which I cover in my book Made to Thrive, but a pattern I observe and there are definitely some overlaps with the 5 roles of a CEO being Accountability, Ambassador, Culture, Strategy & Succession Planning.
What I am writing
5 Trends after the Coronavirus
All over the world leaders are desperately trying to answer the question ‘When will life go back to normal?’ and “How will the future look?’. Of course, no one knows when or how, because there is no precedent to draw upon, to even try to estimate. Just two weeks ago the President of the US proposed that he wanted to “have the country opened up and just raring to go by Easter“, and within that time the US has 10x’d from ~35,000 confirmed cases to ~368,000 cases. The point is that we don’t know a lot about the emerging situation, and where it will take us, and a lot of people are guessing. Some of those who are struggling to guess the most are those who economically will be hit the hardest, small to medium business owners.
At this point, there is a generally accepted principle of countries endeavouring to minimise the impact of a large peak in infections which would overwhelm health facilities as we have seen in countries such as China and Italy, and the goal is then to reduce the number of simultaneous infections using measures such as staying home and social distancing. This concept is known as flattening the curve.
Therefore there will be a period of escalating cases, where they will grow to a peak and then drop. Also, it is reasonable to say that one day there will either be a vaccine or sufficient herd immunity within the community that restrictions are fully lifted. But remember there is no guarantee that a vaccine will be found in the near future, and for example, there is still no cure for the common cold.
Perhaps things won’t go back to normal, but instead a new normal will emerge. If you are trying to understand how to plan for the future, after cashflow, the most important thing you need to do now is to plan how your business can be profitable and sustainable through the coming dance.
Because the dance could last for 1 to 2 years.
At some point though, all restrictions will be lifted, and the best estimate that we hear from experts is that this could be 12-18 months away.
What I’m interested in
Ari Meisel is the author of Less doing, More living and the “Less doing” podcast where he has done more than 400 episodes.
In this interesting article, Ari lists his 5 favourite interviews, and why he liked each one.
As a preview, his list of 5 are
- The Importance of Strategic Coaching for Entrepreneurial Success — A Conversation with Dan Sullivan
- Do You Know How To Sleep Well? — A Conversation with Dr. Michael Breus
- Peter Shallard — How to Be the Entrepreneur You Want to Be
- Jordan Belfort — Sales Lessons from the Original Wolf of Wall Street
- Phil McKernan — Dealing with Emotions as an Entrepreneur
What I am watching
At this stage in the pandemic, cash is king. There is no substitute for managing cash to survive and finding ways to capture cash.
A great friend of mine Shannon Susko released a fantastic video this week which provides a detailed step-by-step process on exactly how you should map your cash flow right now and looking through this situation and beyond.
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