Sometimes one gets the impression that it is not water that is washing around continents, but money. Sums are paid for businesses, which could not be earned in decades, synergy effect or not. Obvious signs for values being robbed and investment crazy investors being on the prowl are ignored or disposed of as insubstantial. We are currently experiencing a takeover and acquisition binge and it seems like nobody is bothered by the fact that economic reason and mercantile sense of responsibility are brushed aside without hesitation.

It should make us worry that money flow is determined more and more by people who might know rather well how to increase money quickly, but only very little about how to secure or conquer markets for a business. Not even the Dear Lord knows how to produce and sell at the same time public housing in Germany, steel in India, coltan in Africa and cookies in America. How should investment firms know it? The reference to the long lists of industry expert advisors on the boards may be impressive but whether or not they are convincing remains to be seen.

I maintain that temporary capital which in general is used for takeovers or acquisitions causes more harm than good in the long run. Why? Because it makes the policy of these businesses for employees and market partners only temporarily predictable, if at all. And exactly this missing predictability is a disadvantage for advancement on the market. Critics of such thoughts put forward arguments for markets wanting to be served quicker today and that they are liable to constant change. This is correct, but this is also why businesses have to be set up in a substantiated way that allows them to wither the storm markets are subjected to today. This cannot be accomplished with managers who understand how to ‘clean up and clear out’. Even the market wants to have predictable partners. This obsession to get a business ‘stock exchange ready’, to supply money and then want it back ‘gold plated’ a few years later, is in general not beneficial. Even if these businesses are ‘morbid’, one should be careful before provisioning ‘quick’ money.

I suggest time and again to find a ‘branch solution’ if businesses need to accept assistance from the outside. Meaning, first and foremost try to find partners who are established on the market and possess expert knowledge. In this connection, I favor strategic alliances mergers which transgress economic borders, alliances in sub-areas such as research and development, division of labor during production processes and shared service-centers.

I am also in favor of uncovering existing resources before outsiders are involved. For me, it is very important to utilize those human resources that are currently in a slumber. After all, human beings can move more than just money.

These thoughts that I am sharing here with you, I recently told an entrepreneur who asked for our advice as strategic consultants on the topic of ‘taking on an investor’. At first, his reaction to our advice was rather reserved. Once we started on the task of examining the situation, we quickly found a common denominator and a basis for the future, without having to turn the business over to a stranger.