Page 160 - 25148.pdf

148 • The 100 Greatest Ideas for Building the Business of Your Dreams

Idea 95 - Take care with fair value adjustments

You will need to understand the 'whys and wherefores' of this. Fundamentally,
when you take over a new company you will be under pressure to produce profits
quickly. You have to make sure that not only are you not fighting with one arm tied
behind your back, but also that you start off a bit ahead of the game.

Due to differences in accounting policies between the two companies, you will
make fair value adjustments in many areas including sales revenues and product
cost. Don't forget the element of risk. You may be able to adjust values in your
favour if there is a risk, for example, of late delivery of a significant order.

There are many innovative ways of structuring businesses. Look for them. You
can get off the balance sheet, for example, with preference shares and then convert
them to ordinary shares through a call option. Remember profit is an opinion; so
make sure you can sell the opinion most conducive to your objectives.

Idea 96 - Don't bet the firm

It was the popular opinion of most of the people I discussed this issue with that you
should not have to take huge risks to build your dream. You have to take a sensible
time target, and informed and controlled risks. One said to me, 'Don't get your
company into a situation where a single event could put you down unless you really
cannot avoid it. Be prepared to bet the business, but don't plan to do it. After all, if
that situation does occur you have disobeyed an important planning rule - always
have a fall-back contingency plan.'

Idea 97 - Buythe underpants of your dreams

The takeover or merger of two companies reaches a mad rush crescendo of work