Institution: London Business School (UK)
Course: Mergers & Acquisitions
In September 2014, I was awarded an Industry Leaders Fund (ILF) grant and it is my great pleasure to submit a report on my experience and training as a result of receiving this. I include the word “experience” because I would like to thank Geoff Vogt, CEO of the ILF, for his assistance and patience over the intervening period, as the circumstances within my industry have changed dramatically in the last 2 years. At the time of the award, the oil and gas exploration and development industry and the resources sector in general, were very buoyant with most companies on rapid growth trajectories. I was in the role of Chief Operating Officer (COO) for Beach Energy at the time and the company, a growing mid-cap ASX listed oil and gas explorer and producer based in Adelaide, saw great benefit in supporting my application for an ILF grant to attend the Stanford School of Business Executive Program for Growing Companies.
The three-step application process for an ILF grant is straightforward, well managed and culminates in an interview with ILF Board members. The focus is on leadership and the ability to develop and expedite the realisation of future leadership potential. The chosen course is important and it should benefit not only you, but also your employer and the community of South Australia. It was a privilege to be a part of the process and ultimately be awarded a $15,000 grant to attend the Stanford program. I would like to thank both Beach Energy and Geoff Vogt for their assistance throughout the process.
However, the situation of the oil and gas industry can change quite rapidly, with movements in oil price dramatically affecting companies in terms of profitability and employment. After applying for and being accepted into the Stanford program, the oil price collapsed from over US$100/barrel to below US$50/barrel in a matter of months and eventually fell to under US$30 in January 2016. Companies moved from a growth outlook to cost cutting and survival mode, with job losses occurring all around the globe. Beach Energy was not immune to this, but having been run in a lean manner specifically to deal with such situations, the impact on employment was less pronounced than for many other companies. My training was therefore held over, waiting for an improvement in oil price. Further, the unfortunate departure in August 2015 of our Managing Director, for family reasons, necessitated my transfer to the role of Acting Chief Executive Officer, while a search for a new Chief Executive was undertaken. Geoff Vogt was particularly supportive through this period and after discussions with the ILF Board, agreed to hold over the grant for a further 12 months.
After resuming in the role of COO, and with the agreement of the ILF Board and support of Beach Energy, I attended the London Business School Mergers and Acquisitions Program in May 2016.
The London Experience
The Mergers and Acquisitions Program at the London Business School is run over five intensive days and includes a very useful optional Finance Workshop on the first day for those that either do not have significant experience with interpreting and utilising financial statements for valuation purposes, or would just like a refresher prior to the course. Most class members attended this workshop. It was very useful and I would recommend attendance.
The main program has three major themes:
Strategic role of acquisitions
The logic for engaging in acquisitions, acquisitions and competitive advantage, plus the tests for good mergers and acquisitions strategy.
Finance and valuation aspects
The valuation of acquisitions targets, different forms of financing and the impact of mergers and acquisitions on reported performance.
Post-acquisition priorities, different approaches to integration plus planning and implementing a successful post-acquisition strategy.
The program was attended by 35 students from all areas of the world and across a wide range of industries. About two thirds were CEO or CFO executives with the remainder of students from a Mergers and Acquisition (M&A) or strategy background. This created an exceptional classroom experience with a range of very different experiences and views.
Professor Florin Vasvari and Professor Marcus Alexander presented the program. Both have a large amount of academic and industry experience, including consulting to industry and private equity groups on many M&A projects. Their delivery was very interactive and encouraged discussion amongst the group. The program also included four guest speakers and group working sessions that enhanced and reinforced the overall value of the program. Although the days were long, I would recommend the program to anyone who may be, or has previously been involved in M&A. It certainly delivers on its promise and simplifies the mystery of M&A into concepts and approaches that will ensure you understand the implications and approach required for successful M&A in your business.
The course material was extremely well organised and provided in advance for pre-reading. In addition, exercises completed in class were well targeted with answers provided via the London Business School Portal along with an extensive array of spreadsheet tools for future use.
Having just been involved with a merger of two mid-cap oil companies, the timing of the course provided an excellent opportunity to review the process that was undertaken and assess opportunities for improvement. This prior involvement in M&A certainly enhanced the experience for me, but I would not consider it a requirement for attendance. Having undertaken the course I now certainly feel better equipped to both assess the value and appropriateness of undertaking a merger or acquisition and then carrying out the integration process. Given the current state of the oil and gas industry worldwide, the major activity over the next 12 months will revolve around these sorts of activities. Companies will position themselves to ride out the downturn and take advantage of M&A opportunities, to hopefully emerge in a stronger position.
The networking and social opportunities to talk with the class participants and presenters provided a wealth of knowledge and experience from around the globe, not to mention a very enjoyable aspect to the week long experience. To be mixing with such a diverse, highly skilled and experienced group was something I certainly won’t forget.
To conclude, I would like to thank the ILF and in particular, Geoff Vogt. Geoff’s enthusiam and assistance during the application process and also follow-up post attendance was very much appreciated. There are some wonderful ILF success stories for individuals, industry and the state. I feel very privileged to have been awarded a grant and to now also be an ILF Scholar with access to a wonderful network of highly qualified individuals, all working hard for the success of their company and their state.