20 May, 2009 | by

smallpiggybank

Forbes magazine had an interesting piece about large business acting as lenders to small business. This comes right behind the biggest credit meltdown in history. This lending comes in the form of retail financing or vendor financing, and in some cases, in the form of corporate venture funding. In 2008, as per NVCA, corporate venture funding arms amounted to 19.2% of all venture deals, an amount that works out to $5.4B out of total deals worth $28B. Similarly, the Forbes article pointed to $52B raised for corporate non-venture financing.

What does this mean for the shareholders in these corporations? Let us look at a few numbers. A stock screen on Yahoo for companies with positive free cash flow, and picked companies that have positive cash balance on their balance sheets reveals about 896 stocks, and most notable among them being Berkshire Hathaway with $16440 of cash available per share. Since free cash flow does not include the cost of debt servicing by these companies, one should also look at the total debt assumed by these companies. A vast majority of these companies have very little to zero debt on their balance sheets. So, to keep matters simple, let us assume there is no debt servicing expense.

The stock screen reveals that, on an average, after excluding outliers such as BRK-A, each company has a 15% return on equity, and $1.3B of cash in the bank. There is a total cash position of $1.2 trillion. In other words, the $5.4B continue reading »

19 Jan, 2009 | by

I wrote this 70 days before Inauguration Day

Will the downturn persuade British business people to learn from Barack Obama and the Germans?

German white collar workers who are not sent on at least 2 weeks training a year fear that they must be on the redundancy short list and will soon face the chop. (Their company is not investing in them – so they must be on their way out!). Their British counterparts (with some exceptions) consider that an offer of training implies a personal or professional deficiency and gingerly start checking the post for their P45. 

Is this the British fondness for the effortless amateur – the smooth-but-not-stirred James Bond? HR and PR departments are patronised with “I have 20 years experience giving speeches old boy – no need for training!” More like 1 years experience – repeated 20 times. 

Practice and preparation are the absolute life-blood of a good performance – even those in the Public Speaking Premier League like Winston Churchill and William Hague.

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