RJG18

I've driven Toyota Landcruisers for the last 8 years. On my 3rd one, and have never had a single non-service part replaced on any of them - nothing. And obviously no breakdowns. They're indestructible. Prior to that I had a Land Rover Discovery, which in 3 years of ownership had about 5 breakdowns, 10 different no-starts on driveway, and probably about 20-30 different repairs or parts failures. At one point I was averaging nearly £1000 a month in repairs on a 5yr old car.

1. Remove all tinkering, interference, micro-management and distortions from the labour market / economy. 2. Put in place a genuine safety net to prevent the poor/unfortunate starving to death, at the absolute minimum level of subsistence. 3. Stand back, and let the free-market sort itself out. 4. If people still end up a bit poorer than they'd like to be then, guess what, that's how poor they really are in relation to the rest of the world. It's not difficult.

Surely any trader should be able to setup business, and if there is sufficient local demand for his products then the business will survive. If not it will close down. Let the free market decide. Just how it should be. It disturbs me that I live amongst people who would apparently prefer a society where force is used to prevent two perfectly legal parties (the retailer and their customers) from trading, by a completely unconnected 3rd party, just because it "offends" their misplaced and ignorant sensibilities. That's a pretty scary society that they seem to want.

Ah, the residents of my home town on form. Will "chain themselves to the railings" apparently, to prevent 99p store lowering house prices... http://www.dailymail.co.uk/news/article-2115498/Haywards-Heath-residents-outraged-opening-99p-shop.html

I agree with this. In my opinion, technical and operational aspects of acquired companies are almost never adequately understood through the due diligence stage, and only seem to come to light much later. As you say, accountants make relatively uninformed assumptions about synergies and about growth. Also, all too often people without understanding of the mammoth complexities of the integration requirements will make crude assumptions like: - Our company has Product or Service capability "A". - We would like a capability to deliver a Product/Service consisting of "A+B". - So we'll buy-out a company who provide Product/Service "B", - On the assumption it will somehow automatically give us the capability to deliver Product/Service "A+B". - Usually, the reality is that it leaves you with the ability to only deliver "A" and "B" seperately, and it costs many £millions of unplanned costs and many years to undertake the integration effort to join-up "A" and "B" in any meaningful way. - And all the while, throughout that integration programme, capability "B" is rapidly deteriorating as the experience and skills that made it leave, and you discover that your own capability and infrastructure was only ever designed to cope with "A". Been involved in the above scenrio many times.

.. sorry, forgot to answer the above bit in my last reply. Yes, there are many cases where depressed valuations of companies (both listed, but also private) make them very attractive acquisition targets. There are also more extreme examples of this, where the acquisition target, although not in administration / liquidation, is highly distressed, and a canny buyer can purchase all equity of absolute fire-sale prices. I worked on one in the last year where a medium sized company had basically destroyed itself through the costs involved in sucessfully bidding for and winning a major government contract. It had defaulted on numerous credit facilities, breached it's banking covenants that had been imposed on it's funding and had many of it's assets attached by the bank, and ultimately it's own equity transferred to the bank. The bank then sold this off for firesale prices (pennies in the pound), which were bought by a big FTSE100 which scooped up some lucrative 10yr government contracts without the costs/risks associated with winning them. Interestingly, the bank that had to write-down / write-off some of the original debt, and then dispose of the secured assets it had acquired at firesale prices, was actually one of the "public owned" banks, so technically you could also view the above transaction as another form of subsidy that transferred wealth from the public/taxpayer to a FTSE100 (although indirectly, and not deliberately).

My own experience is that more companies have a nett-debt position rather than a nett-cash position than you would expect. Cash is held to maintain sufficient levels of short term liquidity, but that's about it. And in many cases, operating liquidity is actually provided using short term rolling credit facilities from the banks, rather than through any actual surplus cash. In large corps, this works in a very similar way to how overnight interbank lending works, except it's between corporates and banks, rather than inter-bank. The company's Treasury department calculates the 24 hour requirement for liquidity (for settlement of payables, interest due, etc), calculates if there is a shortfall and draws down short-term funds from their bank's facility accordingly. Many large Groups also operate automatic cash-pooling between betwen the hundreds of legal entities in their group, to automatically nett off the liquidity peaks and troughs between their internal company structure. In-house banking is also increasingly common in the last 3 yrs. There are obviously exceptions, but in my experience large companies don't sit on large quanitites of surplus cash, and if they do have this, then it makes more sense to use nett surplus cash to invest in some form of interest-bearing instruments, or other assets, rather than hold it in cash. Acquisitions are rarely about having large piles of surplus cash in the bank and looking for a home for it.

It would depend how the governance of the acquiring company is constituted. However, in the case of PLC's the answer would be almost never. There shareholders will typically get to vote at the AGM once a year on topics which will include setting the financial parameters in which the Directors must operate the company within (such as debt levels, debt/equity ratios, etc), sometimes directly, and sometimes indirectly through setting the levels and strcuture at which the Directors will be remunerated/bonuses/etc at and performance targets for the coming year. They will typically also be able to vote out the Directors who don't act in the shareholders interests, as most PLCs require a shareholder vote for the reappointment of the company's officers each year. However, it is worth pointing out that for most big PLCs, the majority of shares are typically held with big institutional investors (pensions funds, hedge funds, and such-like), not with individual private investors, so grass-roots level shareholder revolts are pretty-much non-existant, even when shareholders feel their longer term interests are not being served. (Although not M&A related, look at RBS for an example of this).

My job has been increasingly focussed on M&A activity, and I've been involved in about 50 acquisitions & mergers inside the FTSE100 in the last couple of years, so have had a lot of exposure to the strategic thinking involved, and what actually happens 'on the ground'. There's a lot of factors in play, and the dynamics can be different each time, but here's some of the most commons scenarios: - One of the most common reasons behind recent acquisitions is often to effectively allow the acquiring company to procure short-term growth at the expense of longer term debt. I.e. to acquire companies using borrowed money, increasing earnings in the very short term at the expense of the longer term (and weakening the acquiring company's debt/equity ratio. ) At the moment, this doesn't tend to manifest itself in apparent "growth" in the acquiring company, rather a "papering over the cracks" in a weakening market. For example, I've seen companies with revenues falling 10% year-on-on on an organic like-for-like basis, acquiring companies to boost revenues to plug the 10% gap, making them appear to be performing on a stable basis or showing steady growth, despite having increasing levels of debt on their balance sheet. In the very, very short term this seems to satisfy shareholders and institutional investors, and the market seems not to penalise the acquiring company's share price. Funding for these acquisitions seems to be increasingly weighted towards the creation of private placement bonds (which, for some reason institutional investors - particularly in the U.S. can't seem to get enough of), rather than any bank-provided credit facilities, which now only really seem to be catering towards provision of facilities to provide short term liquidity (although I do know of a number of notable exceptions). However, there are some natural ceilings to this, as most of these instruments have strict covenants around debt/equity and/or debt/earnings ratios meaning that a large corporate can only pursue this sort of growth strategy for a very finite period of time, after which it would have to have returned to real organic growth. There's certainly a lot of "Bubble-like" characteristics prevalent in large corporates who pursue this strategy. - The other limiting factor in the "growth-through-acquisition" strategy is the "overpayment" for the acquired equity compared to the valuation of the acquired company's assets. In year 1, this is not so apparent as, for example, if a company pays £50m for a company with £40m of tangible assets on it's balance sheet, it initially still has £50m on it's balance sheet, with the £10m balance sitting in a "Goodwill" asset. However, goodwill depreciates after year 1 (iirc usually 3yr straight-line, but may be wrong) which means the value of the acquired asset "erodes" in subsequent years, and would need to be replaced through even more organic growth to keep both earnings and balance sheets stable. - Next factor is "synergies". Acquisitions are never about the employees interests, they are about the shareholders interests (although, based on the points raised above, they can ACTUALLY often be about the short term interests of the senior management at the longer term EXPENSE of the shareholders interests), but anyway, NOT for the employees. Part of the acquisition rationale will be about reducing costs through economies of scale and removing duplicated and overlapping functions. The most obvious of these will be support functions (Finance, IT, Marketing, HR, Facilities Management, Occ.Health, etc, etc). If you work in one of these supporting functions in a company being acquired by a larger company then life is about to get much less pleasant for you, despite the fact that you will be in receipt of various communications about how great life is under your new employer (sorry, that's just the way it is). However, this is not limited to supporting functions. Commercially-facing capabilities will almost certainly also be rationalised. This will be a mixture of removing duplicated capabilities, consolidating capabilities due to increased economy of scale, or completely disposing of any baggage (any loss making capabilities, or anything that doesn't fit in with the overall strategic capability of the acquiring Group). These reductions in cost will help increase the margins of the business, and will usually form part of the business case justifying the acquisition. - Another common economy I see regularly, is that when a larger company acquires a small/medium company, the incoming company typically always has significantly more generous employee benefits than the acquiring company. This relates not only to direct employee benefits (bonuses, sales commission, health insurance, company vehicles, defined benefit pension schemes, etc), but also indirect things like onsite cafes, decent coffee machines, gym facilities, etc. I've lost count of the number of times I've visited the offices of an acquisition, and had a fantastic subsidised hot lunch for £1 with genuine Starbucks coffee in a lovely restaurant amongst contented looking employees and thought to myself "In 6 months this will be closed, and you'll all be trudging outside to the local sandwich shop for a £7 sandwich and £3.50 coffee. Removal of benefits and subsidies is again part of the business case. - Aware this is getting lengthy, so - whistle-stop tour of other factors: Other acquisition scenarios: - Acquisitions which are predominantly to acquire IP, patents, etc, or to restrict challenges to the acquiring company's IP. - Acquisitions which are to remove a competitor from the market place, rather than acquire the competitor capabilities. I've seen these formally challenged in several occasions, but have never seem a complaint upheld/blocked by the regulator. - Reverse take-overs, whether a company has a failing/under-performing capability, to buy a better-performing competitor then merges it's existing capability into the acquired one. - Often called "Beheading the beast", in at least 50% of the acquisitions I've worked on, most/all of the Directors/Senior Management Team are exited from the acquired business within 6 months of acquisition, and individuals involved are typically compensated £millions for loss of office. It often surprises me that an acquiring company can so causally dismiss much of the expertise it's just bought, believing it can do better. (In many case, I've seen such confidence prove to be misplaced).

Agreed. He'll be dead from a Hill Walking Accident within a year. Either that or he will be found to have accidentally brutally cut off his own head while combing his hair.

I had a small business account with HBOS 2004-2007 which charged £4 per £100 to bank cash.

Yes, we need a new law that makes it illegal to ignore the original law that prohibits theft. We could then give this new law exactly the same jail term as the first, allowing people convicted of both to serve both sentences concurrently, thus costing the tax payer no extra money in either prisons or policing...

0% on base salary. However, a drop of 54% (-£102,000) due to loss of bonus (cash and share options).

By 2004 the bubble had been running since about 2000/2001. A prediction that it would come to an end by 2007, wasn't too far off, as (if you recall) in 2007/2008 everyhting started failing... we had bank failures in 2008 (Lemans, RBS, HBOS, Northern Rock), quantitive easing, country failures (Iceland), 0% interest rates on savings, etc, etc....... HOWEVER, what I never imaged was that from that point onwards Government, Banks, etc would throw everything they could a propping up the economic system that had been brought down by the credit bubble, at the cost of a MUCH bigger failure in future. I (and I'm sure no-one else on here at the time) thought it would ever get to this stage, where it is now likely that we will see complete currency failures (Euro, followed probably by Sterling and the US Dollar - as least in their present forms), likely failure of the whole western fiat currency experiment, state default by the USA and European countries (Greece, Ireland, Portugal, Italy.... followed by Britain and others), and ultimately, in a few years (IMHO) a state of world war once this has all played out. Sorry to be so gloomy about it all.

Can we vote for ourselves? This is one of my early posts from 2004. (some of the characters seem to have got messed up at some point over the years). http://www.housepricecrash.co.uk/forum/index.php?showtopic=3261 It just goes to show how wrong people were when they say that "No-one saw it coming", when clearly we were here 7 or 8 years ago explaining in detail exactly what was going to happen.

Listening to these VI's you would think that Britian has been almost entirely built on, and that these proposals are intended to concrete over the last remaining scrap of countryside. However, the fact is that Britain still consists mainly of empty fields. Try it for youself... look at Britian on Google earth - it's a big, green, mainly empty space. Then, pick a spot at random, and zoom in to 1-2km, and chances are all you'll hit is a patch of nothing but empty green fields. I've just tried it 10 times.... and 9 times I hit nothing but emptry space, and once got a screen with mainly empty space and part of a small village. And these fields always look empty, with no crops or livestock on them. You could build millions more large houses, with a good amount of land/gardens around them, and not make a dent in the amount of empty countryside we have.

Obviosuly an efficient organisation that uses the office. If you look closely at the picture there are no computers or telephones on the desks or anywhere in the office, but the desks are burried under several thousand pages of paper, so much that they've had to start piling some of it ontop of the support beams, and there are over 50 large lever-arch files lined up on the back wall. What can two people with no computers be doing that generates so much paper?.....

I'm with montesquieu on this one. The complexity of large scale enterprise IT is beyond what most people comprehend based on their own day-to-day IT usage. People just assume that "it's just some computers (I've used those at home!) and some screens with some data on and maybe a password (I've used all that sort of thing, with screen, and data and stuff on the internet!) so how hard could it be? For example, take just one enterprise system, such as a major ERP (e.g. SAP), you are looking at a system performing several hundred (if not thousand) integrated business processes (often mission-critical), a database or distrubuted databases of more than 10,000 physical tables, and many terabytes of data, a userbase of many thousand concurrent users, across several hundred different sites (each with it's own variations in hardware, infrastructure, network connectivity and security), many different layers of network infrastructure, a data security model of immense complexity. It's these sorts of projects that take teams of hundreds of people, several years, and many tens of millions (if not hundreds of millions) of pounds. And many big organisations have many systems of the scale described above at various stages of their lifecycle. And THESE systems all have various degrees of interaction and interdependency too. HOWEVER - having said that there are a lot of cowboys (and many of the big players) who will take your tens of millions of pounds, waste it, implement rubbish, and rely on the organisation not being able to judge what is and isn't effective use of money. So I'm by no means trying to defend some of the large consultancy firms. Just trying to point out that large IT is never simple and never cheap.

I've experienced a case where a local government office paid £4000 to their private-sector service provider to have a desktop PC moved two spaces along a row of desks (about 3 metres).

I'm already on a marginal rate of nearly 66%. After 2008 I had to take almost half my salary in share options (deferred for 3 yrs), which are taxed at: 50% income tax 2% employee NI 13.8% employer NI (paid by employee) An extra 12% would take this to nearly 78% ! Would be time to leave, I think.

I'm an accidental caravan owner. My wife's dad bought us one as a present a few years ago. It a big twin-axel one, and is huge. So big in fact that I can't actually tow it on the road, as the combined weight of it and my Land Cruiser means that I can't drive it on a normal (post-1997) driving license, and would have to take some sort of lorry test. So it spends all it's time permanently located on a holiday site in East Sussex. It's really well appointed, modern inside, proper beds, fully equipped kitchen, flatscreen HD digital TV, DVD, proper bathroom with toilet, shower, etc. It's nice to stay in for upto a week, but wouldn't want to live there. Even a big caravan like this does feel very cramped, even compared to a flat. Cost to pitch it are about £90 a week or so (and about £300 a year to store it when it's not pitched). It's also £28 a month to insure. So cost savings wouldn't be huge - as I'm sure you could rent a much bigger flat for under £90 a week. (Pictures of the model I've got attached below).

Good on him. He really wouldn't able to win either way. If he lived in a big house, the papers would be running stories questioning how someone with a big house + swimming pool, etc could possibly be representing the ordinary working man... and probably be claiming his big house is 'unjust' and unfair when compared to the millions who have to live in social housing... ... yet, since he lives in a small HA terraced house, people now criticise him for the opposite. "Why DOESN'T he live in a big house, and leave his small terraced house for the poor....etc?" If he lived in a small terraced house people call for him to move to a mansion. If he lived in a mansion people call for him to move to a small terrace house. Can't win.

My brother works for Rok. I got a call from him this morning to say that when he arrived at work this morning, employees were being turned away at the door by administrators, and not allowed onto the premisis. This was apparently a surprise to everyone, with even the most senior managers at that particulalr office location not informed of what was happening, and not allowed into the building.

I find this post, regarding Job Seekers Allowance rather strange: Can't sign-on because no-one will give a free bus-pass, thereforce can't get to the job centre to sign-on. Sounds rather lazy to me. If you are not working, then you have nothing better to do, so walk there! Even if it's a four hour walk each way (which would allow you to walk about 20 miles each way), you'll still only have "worked" an 8 hours day (once a week). .

BTW - £6,000 is still a very good salary in India. When I work in India, the driver I am assigned to drive me around (who incidently often works 14 hour days or more) is paid £600 a year. I usually give him at least a £50 tip when I leave (which makes me feel better about it, anyway )