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Something smells here... |
| September 2nd, 2010 BY Christoph Klenner |
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Ample media attention is given these days to the envisaged gas deal between Poland and Russia\'s state-owned gas giant Gazprom, and its pending approval by authorities in Brussels. At a meeting with President Komorowski on September 1, the European Commission\'s President, Jose Manuel Barroso, confirmed that the Commission was backing the deal, claiming it would help improve bilateral cooperation with Russia. Whatever that really means.
The Commission seems, or seemed, to be worried about the impact of the deal on competition within Europe\'s single gas market, as the agreement imposes fixed conditions over a period of a quarter century.
At the ... Read
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The complexities of Poland's cultural conflict |
| September 2nd, 2010 BY Andrew Kureth |
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To hear the international media tell it, Poland\'s current row over the wooden cross in front of the Presidential Palace on Krakowskie Przedmieście is a symptom of a sharp cultural divide that is now beginning to manifest itself more visibly.
Certainly that\'s part of it, but the reports, in the English-language mass media at least, verge on the simplistic. They portray the conflict as one of young-versus-old, rural-versus-urban, educated-versus-non-educated and, especially, religious-versus-secular.
But as those of us living here in Poland know, the divide is more complex than that.
Poland is often described as a “deeply Catholic” country – and that is ... Read
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Operating a data room in corporate finance transactions |
| August 24th, 2010 BY Les Nemethy |
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Several months ago I wrote about the subject of assembling a data room; this present article deals with the subject of operating a data room once it is assembled and will discuss: (a) data room rules; (b) answering questions posed during the data room process; and (c) the importance of the data room in subsequent negotiations.
While traditionally data rooms involved physical documents, a modern trend is to have all or part of the data room in virtual (electronic) format. Virtual data rooms will be the subject of a future article.
(a) Data Room Rules
Every well-run data room should have ... Read
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Mr President, time to get to work |
| August 10th, 2010 BY Ewa Błaszczyńska |
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Last Friday, Bronisław Komorowski was
officially sworn in as Poland’s next president. Even though the
campaign is over, political mudslinging and party animosity
continues, as demonstrated by recent clashes over a cross erected in
front of the presidential palace to commemorate the plane crash that
killed President Kaczyński, First Lady Maria Kaczyńska and 94
others.
Having benefited from Poland’s
ability to withstand the worst of the global financial crisis, Civic
Platform (PO) and President Komorowski campaigned on the promise of a
modern, competent government and continued economic and structural
reforms. One of the main arguments against voting for Jarosław
Kaczyński and PiS was that critical legislative proposals would risk
being vetoed, ... Read
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Alliances as an option to acquisitions |
| August 10th, 2010 BY Les Nemethy |
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Many investors often think that acquisition is the best or fastest way to achieve a strategic objective such as entering a particular market or acquiring a certain technology. An alliance, however, may be at least as good an option in certain circumstances (such as where a company lacks a budget for acquisitions). Alliances are very common: there are many tens of thousands of them negotiated every year, most of them across borders.
Types of alliances
An alliance may be defined as a association among two or more parties which involves a sharing of resources and coordination among parties to achieve common objectives.
The ... Read
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How a private equity investor chooses acquisition targets |
| July 26th, 2010 BY Les Nemethy |
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My last article discussed how strategic investors typically choose acquisition targets; this article does the same for private equity investors.
Private equity investors typically have a charter which sets out well-defined parameters for investments to be made by the fund, including:
Nature of investments. Some funds like high-growth companies, others prefer investments with stable cash flow or dividends. Still others prefer turn-around situations.
Geographic scope. Many Central European funds restrict themselves to EU member states, the bolder ones will venture in to former Yugoslavia or Turkey;
Preferred sectors. Some funds are generalist funds that will look at just about any sector, others focus on ... Read
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A new system of global governance is desperately needed |
| July 16th, 2010 BY Piotr Maciej Kaczyński |
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The idea of having organizations which, in a series of summits, allow informal meetings between heads of state or governments from the most important and influential states in the world was sound in its conception. It provides key global figures with a place to interact, which often serves to ease tensions or even prevent conflicts. In the Cold War era it was an excellent medium for the exchange of ideas among the richest on the planet.
But today this formula needs a serious re-appraisal.
The members of the G7 were: the United States, Canada, the United Kingdom, France, Germany, Italy and ... Read
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How a strategic investor should identify acquisition targets |
| July 12th, 2010 BY Les Nemethy |
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A strategic investor uses a very different process to identify acquisition targets than that used by financial investors (the subject of my next column). For a strategic investor, as the name implies, identifying an acquisition target must flow from the acquiring company’s strategy.
The worst methodology that a strategic investor might use to identify targets is to respond to the acquisition opportunities that it finds on an ad hoc basis. This simply will not work for two major reasons:
First, responding to opportunities on an ad hoc basis typically means that deep strategic thinking has been short-circuited.
Second, if a strategic investor acquires ... Read
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Poles choose the future |
| July 5th, 2010 BY Andrew Kureth |
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There were many twists and turns, but finally Poland's next president has been chosen – and Poles have made the right choice in electing Sejm Speaker Bronisław Komorowski.
Mr Komorowski's vision for Poland differed significantly from his opponent's – his was a forward-looking vision, a vision of a modern Poland which interacts with other countries on the global stage as a responsible member of the international community. He envisions a Poland where there is less state interference in peoples' lives and in business, and where entrepreneurship and foreign investment are encouraged and rewarded.
The majority of voters in this election weren't convinced ... Read
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As elections near, tempers flare |
| July 1st, 2010 BY Ewa Błaszczyńska |
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As Poland's presidential race reaches
its climax this weekend, much has been said about the country's
political divide. Many suggest that voters are deeply split over the
direction Poland should take, with debates centered on whether
Poland should be "modern" or traditional, eucentric or
independent, secular or religious. Equally, both Polish and foreign
media has played up the socio-economic differences between voters. In
some cases the media has pitted urban against rural, free market
beneficiaries against post-transition losers, young against old.
Interestingly, Poland's political
divide is also felt across the Atlantic. The Polish diaspora in the
US and Canada, numbering approximately 12 million, voted
overwhelmingly for Jarosław Kaczyński in the first ... Read
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When will real corporate lending become widespread in Central Europe? |
| June 28th, 2010 BY Les Nemethy |
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Recently I was invited to attend a
half-day presentation given by a large mid-sized Central European
client and their bankers, with the objective of renewing the
company's line of credit.
While there was plenty to be concerned
about with regard to the performance of the company, the bankers
asked very few questions, none of which were particularly
penetrating. When the bankers confirmed that the line of credit would
be renewed my colleague and I looked at each other in amazement.
My colleague was a little quicker to
come to a conclusion than I was: "They don't care about the
business; they are amply covered by the real estate collateral ... Read
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If only the foreign media understood Polish... |
| June 25th, 2010 BY Christoph Klenner |
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Today's Polish political elite and
its media are extremely lucky - lucky that most foreign journalists
don't understand Polish. Lucky to have a monopoly on news and opinion
not only in Poland but also abroad. Foreign media have little choice
other than to blindly copy the Polish mainstream newspapers.
So if one hears that "foreign
media" or "western society" are worried or concerned
about Jarosław Kaczyński running for President, one has to keep in
mind that these are often the recycled opinions of loyal Polish
journalists.
This is a beautiful self-fulfilling
prophecy, and quite frankly it is dangerous for the sustainability of
the Polish democracy.
I distinctly remember Charles Crawford,
formerly the ... Read
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In the second round, Polish voters deserve more substance |
| June 21st, 2010 BY Andrew Kureth |
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Our editorial after the first round of the presidential elections:
In the first round of elections on Sunday there were few surprises, save a slightly better-than-expected showing by leftist candidate Grzegorz Napieralski. The end result was more or less what was expected – Law and Justice party leader Jarosław Kaczyński and Sejm Speaker Bronisław Komorowski will go head-to-head in a July 4 runoff, with neither having received an outright majority.
Focus on the issues, please
Perhaps now we can get down to a genuine debate of the issues, as the campaign so far has been less than substantive. Though it was admirable ... Read
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The first round of the elections - anticipating the outcome |
| June 17th, 2010 BY Piotr Maciej Kaczyński |
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The last time Poles voted in June was in 1989. The highest turnout of Polish voters in parliamentary elections ever - 62 percent - was recorded then.
Will we see another such mobilization of the voting public this Sunday? There are a number of reasons to be optimistic. Emotions are running high and supporters of the three main candidates have their reasons to vote for Kaczyński, Komorowski or Napieralski respectively.
The presidential elections are usually more popular among voters than the somewhat complex parliamentary polls. In the presidential elections, constituents vote state-wide for one person. The message is clear. There ... Read
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Why equity can be so much more expensive than debt |
| June 15th, 2010 BY Les Nemethy |
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I was recently leading a seminar for
CEOs and business owners, where a large number of participants could
not understand why the cost of equity was so much higher than the
cost of debt. I had mentioned that the cost of debt (eg. interest
rates) were typically in the range of four percent to eight percent
for most mid-sized companies in Central Europe, denominated in euros,
and the cost of equity (eg. Internal Rate of Return) required by most
private equity investors, was in the range of 25 percent or higher.
A number of seminar participants could
simply not fathom why equity would cost four or five times ... Read
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Komorowski, the clear choice |
| June 14th, 2010 BY Andrew Kureth |
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For those of you who haven't seen it yet, here's WBJ's endorsement for this weekend's presidential election:
A critical decision lies before Poles this weekend. The choice they make during Sunday’s election – whether the final vote turns out to be this weekend or in a runoff two weeks later – will have profound, far-reaching repercussions for society, the economy, the business environment and the level of prosperity.
There are 10 presidential candidates vying for Poles’ votes, but only two have a chance of making it to a second round – Speaker of the Sejm and Acting President Bronisław Komorowski of Civic ... Read
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Unlocking the value of your company |
| June 7th, 2010 BY Les Nemethy |
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This article is the thirtieth in the "Corporate Finance/M&A Corner" series. To mark this occasion, I am pleased to announce the publication of a book entitled "Unlocking your Company's Value: The Keys to a Successful Business Exit" (available at www.lesnemethy.com). The book has drawn considerably upon material used in these articles.
In the same way as planning a mountain climbing expedition, a company owner should plan not only for reaching the summit, but also for descent (which can be at least as treacherous). In the corporate world, we should strategize not only on how to make our companies bigger and better ... Read
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Investing in young entrepreneurs |
| June 7th, 2010 BY Ewa Błaszczyńska |
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Against the backdrop of a global economic recession, risk averse capital markets and a pan-European debt crisis, Poland has forged ahead with its planned privatization programs. The intended goal is not only to open up some of Poland's largest sectors (energy, chemicals, and financial services) to competition, but to make Poland a sustainable and truly modern post-communist economy.
In addition to developing "national champions," one major factor that will contribute to Poland's long-term economic success is supporting and nurturing small and medium-sized enterprises as well as the next generation of young entrepreneurs.
One organization determined to help young Polish entrepreneurs break through ... Read
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Approaching the Polish EU presidency |
| May 26th, 2010 BY Piotr Maciej Kaczyński |
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In July 2011, for the first time in history, Poland will take up the role of a rotating presidency of the Council of the European Union.
This is a gigantic administrative task, as there are about a 250 working groups, which will need to be chaired and managed. Nine out of the ten Council formations will be chaired by Polish ministers.
This raises a question: will the Polish state be able to meet the challenge? After all, the rotating presidencies of the two previous newer member states - Slovenia and the Czech Republic - were irrelevant or proved to be ... Read
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Drag Along/Tag Along Rights |
| May 17th, 2010 BY Les Nemethy |
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"Drag Along" and "Tag Along" rights are used by investors to facilitate their exit from an investment.
They are methods particularly favored by private equity firms, who almost always do their best to establish a clear exit strategy even before they decide on investing in a company.
A Tag Along is relatively non-controversial: it gives a shareholder the right (but not necessarily the obligation) to exit along with another shareholder when that other shareholder is exiting, usually on the same price and terms.
This helps avoid any shareholder involuntarily finding himself or herself with a different co-shareholder to originally expected. Tag ... Read
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