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The Executive Newsletter of TheOfficialBoard

LBO Opportunities

By Igor Quézel-Perron

30-nov-igor-quezelA lot of managers, after long careers in big corporations, used to approach head-hunters for positions in companies under LBOs. This has changed in these difficult times for Private Equity: fewer operations, less leverage, smaller dreams…

Are there real opportunities today to join an LBO company as CEO or CFO?  Many managers (and it begins generally in their early 40’s) are looking for more independence and entrepreneurship, but do not want to create their own companies, because it is either too risky, or because they do not have The Idea.

Then, they think they can take over a company, or find a position in a company under LBO. It is true it can be a good deal: nice compensation, and potential leverage. Generally Private Equity firms propose that they invest 1 year salary, and the goal is to have a multiple of this investment once company is resold.

If the drivers of this kind of opportunities have not changed, the economic situation has, and candidates know that. In 2009, they showed less enthusiasm for this kind of job, because they know that there is less leverage.

There are also fewer opportunities all over the world. For example, In France in 2008, out of 194 LBO operations there were only 24 Management Buy In (MBI) or Buy In Management Buy Out (BIMBO) of which 80% were valued below 15 Mi€. On the first semester 2009 out of 62 LBO, there were 13 MBI or BIMBO of which 100% were valued below 15 Mi€. In a nutshell, for CEO, we are talking about only 24 new positions in France in 2008.

What profiles do those jobs require? Quite surprisingly, Price Equity firms are always open to meet good candidates. For them, this means experienced managers, with a good knowledge of the sectors those firms have invested in (which is often public) or of the sectors they are considering investing (information they need), ideally with a mix of experience in large groups and smaller companies.

Why are Private Equity firms opened to meet candidates while not recruiting? Because they want to know the market, the good potential candidates for their investments, identify potential board members, discover a new market through a specialist… They love seasoned managers presenting them investment opportunities. They can help you to externalize one of your less strategic activities or to prepare for your next career step. So if you have a chance to meet them, do not miss it.

Igor Quézel-Perron is Partner at Eric Salmon and Partners and conducts global search. Eric Salmon and Partners is a leading European executive search firm with 6 offices in Europe.

Filed under: Finance, The most read — @ 12:21 pm on November 30, 2009
 
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Transition management

By Dominique Langlois & Frederic Marquette, EIM

26-nov-eim-dream-team1Balancing Excellence and Urgency is a hard, daily challenge for many executives.

In addition to staying top of the daily business life, executives may face unexpected exceptional circumstances such as the long-time absence of a key man, a deep organizational change, the integration of new company, a heavy restructuring because of a lower volume or a sharp cost increase, redefinition of target market or niche, or the launch of a new activity abroad.

When managing all this calls for specialists, that is the everyday business of a few Transition Management Firms.

How does it work? We have built an important pond of highly seasoned executives including all kinds of management roles in all the industries. Those executives can be asked to contribute for a few weeks (experts), a few months (transition) or a few years (recruiting). Most executives can be available for the customers within days.

How are selected the executives? Our executives have been identified because of their solid academic training, of their professional backgrounds and their concrete achievements in the various positions they held. As for any hiring, we only add them in our database after serious reference checkings and in-depth interviews.

How do they work? As soon as they start working for our customers, those managers are permanently assisted by one of our Partners. They all come from top management consulting firms with valuable operational experiences including executive roles. The manager needs to execute fast decisions, to understand key strategic elements, and take the right measure of the environment. This high level assistance is key ingredient for the success of the mission. Even if the challenges are new, the stakes are big and the customers’ expectations are high. A partner will assist the manager with wisdom and seasoned experience.

Dominique Langlois and Frédéric Marquette are Partners at EIM, a leading transition management firm with 15 offices in Europe, Asia and in the US.  EIM has carried out over 6,000 missions in the last 20 years and has over 15,000 high level executives available on demand.

Filed under: Manage change, The most read — @ 9:33 pm on November 26, 2009
 
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Trusts in Europe

Richard Jadot & Louis-Jérôme Laisney, Lovells

France has recently introduced a new trust and security mechanism transferring the management and the ownership of an asset to the trustee. Those new security tools should help the finance industry to leverage new pools of assets, to contribute to lower borrowing costs and to provide lenders greater diversification. In a cash crunch environment, unleashing a wave of financial innovation is an opportunity for many corporations to free up cash.

nov-2009-richard-jadot-louis-jerome-laisney2

How this happened? The law about the trustee or fiducie was first introduced in 2007. It was not judged sufficiently clear and protective by the stakeholders and thus became largely ignored. In January 2009, the regulator introduced rules to organize the management and the security of the assets. For instance, it is now possible for a borrower to provide trade receivables, movable or fixed assets as securities for his loans.

How it works? Pursuant to the fiducie agreement, the asset is transferred to a trustee (which can either be the lender or a third party) as a separate asset. This protects the lenders in case of bankruptcy proceedings against the grantor or the trustee.

When the fiducie agreement guarantees the financing of the transferred asset, a secondary agreement might be introduced, leaving the transferred asset under the control of the grantor. The grantor can then use and manage the financed asset which is now owned by the lenders. Some uncertainties remain regarding this secondary agreement in the context of insolvency proceedings.

The Fiducie concept exists under various forms in several other European countries: in the United Kingdom it is called Trust, in Germany Treuhand and in the Netherlands Bewind.

Despite these uncertainties, Fiducie has been qualified by some commentators as the future “Queen of security rights”. It is in our view premature to make such a strong statement. It is undeniably an interesting concept which will hopefully “find its way” and generate innovative security package schemes in the market.

Richard Jadot and Louis-Jérôme Laisney are respectively Partner and Lawyer at Lovells, in Finance and Banking. Lovells is one of the largest international legal practices with offices in Europe, Asia and the United States.

Filed under: Legal — @ 12:52 pm on November 12, 2009
 
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Cooking Naturally

With Johann Lafer

2-nov-johann-lafer1. Why is German Cuisine is so diverse and yet relatively unknown?

German Cuisine differs a lot by region. In Hamburg, the cuisine is inspired by fish, shellfish, and fresh seafood, while Bavarian food is based more on well-crafted sausage, wiener and sauerkraut. Our vast forests provide a great variety of wild game, fruits and mushrooms; vegetables like asparagus and cabbages are of exceptional quality. We almost always include dedicated dishes with delicious potatoes. Poultry and meats are included in many recipes, but cooked very differently in each region.

2. Why do you so often add aromatic herbs? Where do you find them?

Aromatic herbs are essential to cooking. They help to modify and magnify the taste, and add essential freshness to the meal. I have always included them in my recipes. For years I have been planting and growing them in my kitchen garden.

3. You teach cooking on ZDF, a national TV network. What is your advice for home cooks?

Cooking should be enjoyable. My passion is to promote natural cooking and the arts of the table with my compatriots. In Germany, because of the wars, we missed two generations of family cooking. We have to begin again with the basics: great ingredients lead to great food. At Table d’Or, we start with simple recipes to get the basics and educate your palate. Then you will enjoy haute cuisine whether you cook it yourself or you savour it at someone else’s table. Be curious, take your time, have fun, and enjoy it to the fullest.

4. What are you passionate about?

First, I love my Chef’s job. With my team, we select the very best products. We are always very curious about the best recipes and how to improve existing ones. I love the creative potential of my job. I feel I can improve the German feel for taste and great food. My greatest reward is when I see the happiness in the eyes of my customers. Cooking is giving Nature our deepest respect, every day.

Johann Lafer is one of the Grand Chefs at Relais & Châteaux, a family of 480 prestigious hotels and restaurants in 56 countries. He is also the owner of the Relais & Chateaux Stromborg, Germany. He teaches cooking on ZDF, a national German network and at Table d’Or.

Filed under: Chef's words — @ 11:54 pm on November 4, 2009
 
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