Hanover Financial Services Archives

TuesdayJun 05, 2007 9:27 am

Investors are More Interested in use of Cash Flow

Cash may be considered king in the corporate world, but just having lots of it doesn’t mean that a company will necessarily reign in investors’ eyes. It turns out that history shows a significant correlation between how a company builds and uses its cash holdings and the future return of that company’s stock price. Investors tend to reward share buybacks, dividends and debt repayments, but are less enthusiastic about capital spending, research and development and acquisitions, at least one new study suggests. Of course, investing in the business could help a company build for the future, which could eventually boost…

ThursdayMay 31, 2007 2:40 pm

Building Better Boards

It's common knowledge that the board of directors is the backbone and foundation of just about every business. An effective board of directors is an absolute necessity for larger corporations: they help keep management focused and insure that shareholders are protected. But many small companies should also look to create a board of directors, even if they don't think they need one. The building of an effective board requires management to think strategically and long term if it wants to eventually build a board of directors that is committed, effective and passionate about its mission. The first step in the…

FridayMay 25, 2007 11:20 am

Accounting Firm Should Fit Your Business

U.S. public companies are expected to spend about $1.5 billion in order to be in compliance with the Sarbanes-Oxley corporate governance law, according to the Securities and Exchange Commission. And certified public accountants will play a key role in the process. So choosing the right certified public accountant (CPA) for your business is something that shouldn't be taken lightly. The survival and success of your business could depend on your selection. With the changes to public Company reporting requirements and insurance costs for CPA firms rising by the day, the pool of qualified candidates is getting thinner by the minute,…

ThursdayMay 24, 2007 11:54 am

The Process of Buying or Selling a Business

Technology based products are subject to more rapid change and obsolescence, particularly as product life cycles shrink at the equipment level and business becomes more global. Legacy designs do remain after decades of production, but are no longer 'cash cows' due to significant price erosion. In addition, core technologies are now practiced worldwide, life cycles are shorter, and competitive advantage comes more from cost leadership than through customer service. Customers are looking for suppliers who can do more, support them globally, and provide error-free products at a competitive price. As a result of these and other factors effecting industry today…

WednesdayMay 23, 2007 10:40 am

Oil and Politics Really Don’t Mix

Whatever the twists and turns are in global politics, whatever the ebb of imperial power and the flow of national pride, one trend in the decades following World War II progressed in a straight and rapidly ascending line -- the consumption of oil. If it can be said, in the abstract, that the sun energized the planet, it was oil that now powers its human population, both in its familiar forms as fuel and in the proliferation of new petrochemical products. -- Daniel Yergin, 1992 Oil is the undisputed King, in a world preoccupied with the consumption of its natural…

TuesdayMay 22, 2007 11:25 am

A Dozen Reasons Why Businesses Fail

Question: Why do businesses fail? I hear 90 percent of businesses will not make it past five years. Answer: The following statistics list why some businesses fail: Eighty-two percent have poor cash flow management skills or poor understanding of cash flow. Seventy-nine percent start out with too little money. Seventy-eight percent lack a well-developed business plan, including insufficient research on the business before starting. Seventy-seven percent fail to price properly Ñ they fail to include all necessary items when setting prices. Plus, they fail to point out what added value the company is brining to the table. Seventy-three percent…

MondayMay 21, 2007 11:46 am

Going Public Through A Reverse Merger

The current economic environment has created a unique opportunity for small to midsize private companies. No longer do they have to look at the sale of their businesses as the only viable long-term exit strategy or ultimate liquidity event for their shareholders. Because of the current depressed valuations for legitimate operating public companies, private companies can gain access to the public markets by reverse merging their businesses into an existing, operating publicly traded Company, which can be accomplished at a fraction of the cost of a traditional public offering (IPO). This commonly used method of going public, which is currently…

FridayMay 18, 2007 9:38 am

Al Gore’s Green America

Because of the high cost of energy, more and more companies are finding creative ways to save money and operate their businesses while using less fossil fuels. And company managers are apparently looking very hard for those energy savings. Last fall, some 30 percent of those surveyed by the Alliance to Save Energy said they had made energy management a critical part of their business plan. A third said that were undertaking major capital projects to cut energy costs. And a quarter said they were at least working on low-cost, one-time fixes to try to cut energy bills. The potential…

ThursdayMay 17, 2007 8:10 am

Reverse Mergers Can Fast-Forward Profits

A recent column painted reverse mergers with a broad, negative brush. Reverse mortgages offer a compelling way for young companies to come public. They are faster and more cost-effective than traditional, banker-backed IPOs. This Sunday's New York Times had an interesting article by Kurt Eichenwald on the topic of reverse mergers, but I have to take issue with his view. A reverse merger is a way of taking a company public that skirts the Goldman Sachses (GS:NYSE) and Morgan Stanleys (MWD:NYSE) of the world. And, consistent with my articles on PIPEs, Dutch auctions, and SPACs, I am always in favor…

WednesdayMay 16, 2007 9:08 am

Some Assembly Required

The market for your product is larger than it has ever been. Your market encompasses the world. But, the promise of a worldwide market is always threatened by worldwide competition. While you are sleeping, there is a bright businessperson on the other side of the world-or maybe just next door-planning to capture your market share, or try to prevent you from even entering the market. Lower costs can lead to lower prices; and with all other variables being equal, the lower price almost always wins. Companies need to examine their costs to identify savings that will allow them to lower…

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