John Linton
We spent the bulk of today travelling from our hotel in Colombo back to Singapore and then having a quick shower and change back in to 'business attire' to meet with one of two potential purchasers/JV partners for Exetel. It's a little bewildering to move from two days of attempting to put in place ways to further develop Exetel to 'getting your head right' in discussing with people interested in buying your company just what Exetel is currently all about in completely different terms.
I really dislike these sorts of discussions as, try as I might, I have trouble taking any real interest in the EBITDA/ROI/Market Position 'cr**' that is, quite understandably, the basis for all discussions by potential buyers of companies and the only things they are interested in talking about. Let me also state that neither I, nor anyone else at Exetel, initiated these nor encouraged them in any way after the initial approach. I agreed to the meeting as I would be in Singapore on other business discussions
It probably isn't the best time to have serious and friendly 'negotiations' after a tiring day travelling and when your mind is totaly engaged in formulating plans based on what you've just been doing for the past three days,
However we spent an interesting and, given the circumstances, amicable 2 hours providing some detailed financial information (using my lap top files of the past four year's financial history and the next 18 months projections) and not permitting any detail to be copied. I suppose I shouldn't have accepted the meeting invitation because I doubted that there could ever be any 'meeting of minds' in terms of finding any real common ground for selling Exetel to someone else.
So I resorted to my tried and true method of negotiation which is to state in advance that the price we want can't possibly be justified using any reasonable financal 'bean counting' criteria of EBITDA etc, etc and that the ony price we will sell at is laughably in excess of such criteria but that's the way it is. If they wanted to buy the company then the price is as stated and they coud spend the rest of their lives pointing out how unreasonable such a price is but it won't change the amount of money it will cost them to buy Exetel.
As all reasonable people in such situations quickly understand - it's a seller's market. They have said they want to buy - as soon as you do that you have no bargaining postion - you either pay the asking price (in cash) or you are wasting your time. I've had enough experience over the past 20 years of all sorts of people taking me for a d***head who can be conned by the persuasive powers of people young enough to be my children who think they are so much cleverer than I am they can somehow persuade me to believe that 2 + 2 is any number they come up with to take even polite and conservative people seriously when they fail to understand the basic business dynamic of there is a value rather than a price involved in any commercial transaction.
The value of Exetel, apart from its future profit making potential, is based, for us, on many things. Among the things that any buyer can't put any price on is our need to use Exetel as a model example of how to run a company using the most sophisticated automation systems in place in any similar enterprise based on a unique, and easily transportable, management system. This alone adds a huge value to Exetel, for us, but a value that we aren't about to quantify to a possible purchaser of Exetel at this time. I briefly made reference to it but said that they systems I was referrng to wouldn't be part of any sale and therefore there was no point in talking about them.
So after two hours of 'friendly' and smiling 'full and frank' interchanges of views we closed the meeting promising to seriously consider their basis of offer which both they and we knew meant that we wouldn't give it any further thought.
However, it wasn't all time wasted - at least on our part. We gained valuable insights in to what they regarded as being opportunities in the Australian marketplces that we hadn't previously considered and we can probably use that knowledge to Exetel's benefit in the immediate future.
We might also be able to buy some services from them at prices we can't currently achieve in the Australian supplier network we have access to.
So a tiring end to the day but a day that was valuable in looking at current opportunities differently.