 | |
| Jimoh Ibrahim |
At the just concluded SuccessDigest Enterprise Awards,
(SDEA) 2013, where Jimoh Ibrahim (OFR) was
also inducted into the SDEA Hall of
Fame, attendees got more than they bargained for when the business mogul took to
the rostrum to deliver his keynote address which became a high level business
lecture on company acquisition.
In this lecture Jimoh literarily demystified his secret of acquiring several billions of Naira worth of companies without putting down any of his money and turning them around by making specific management changes.
Here we have reproduced an excerpt of the lecture hot and sizzling for your enjoyment, and the good part is that Jimoh Ibrahim also says you should be bold and use his strategy to buy companies too. The New Year is looking really bright isn’t it? Enjoy the lecture.
How To Purchase Failed Companies Without Your Money
Most of the companies you hear that I own today, even the multi billion naira ones, I didn’t invest a kobo of my money into buying them. In fact, before buying a lot of these mega corporations that I own, sometimes I didn’t even have any reasonable money in my bank account. And I am about to tell you how I did it, my great business secret and how you too can also do it, because I want to see more Nigerians making it and developing our economy by owning and reviving companies like I have done. Are you ready?
I go for undervalued companies; companies that are dead but have no business being dead. When I spot such a company, the first thing I do is to look for a good bid proposal writer. I approach the person to write a very good bid proposal. After the person has done so, I then approach the owners/sellers of the company, whether it is captains of industry, often the Bureau for Public Enterprises, and submit my proposal. Usually, because of the high quality of the proposal, my bid interests the owners and they accept it. But the next thing is how to pay for the company and how to get the money to turn it around.
By the time my bid is accepted I now approach the banks, showing them the documentation of acceptance from the owner/sellers. I then ask them for finance to be able to pay for and turn around the company. Now this is the kind of news that banks like, and often banks, one way or the other would have heard of my bid success. So, what happens is that they queue up, offering me loans at better conditions, so I then relax and make my choice.
You must understand: For banks it is a win-win situation: Banks love such business contracts and arrangements, and want to come in with financing because they know that the company more often than not has some very valuable assets that will guarantee the loan. They also know they will make money from interest.
So after I secure finance from the banks I go and pay for the company, then the banks hold on to the title documents of my new company, pending when I repay the loan, which is usually fully paid up after several years. Then they give me my title documents and I am now the full owner of a mega corporation which I didn’t invest a kobo of my money in buying. The money paid back to the banks is generated by the company, I never invest a kobo of my own.
So even if I am broke today, I can purchase a billion dollar corporation using this business strategy, and you too can do so.
Today, there are so many troubled companies. All you need to do is to spot one, you can search for such troubled companies with the Bureau of Public Enterprises. If you find one, Don’t Be Afraid! Go for it! You can become a turn-around-specialist and make billions in the process. So, think big! I say you should not fear because the odds are stacked in your favour.
Most of these ‘dead’ companies have assets that are bigger than their cash/share value. So even if they don’t have cash, you can see that they have land that you as the new owner can sell and make profit from while turning the company around. They are in trouble not because they are worthless, but because of bad management, and all you need to do is to institute good management and discipline and you will see yourself reaping billions from a company everybody thought was dead.
They already have a brand name and name recognition in the country, what’s drawing them down is most likely bad organization and management. They also have a dedicated market. For this reason, in fact, I boldly say that it is better to get a troubled company and turn it around than to try establishing one from the scratch.
If you are to buy a ‘troubled’ media company for instance, that company already has a dedicated readership and probably loyal advertisers that have been with them for long. So you find out that the only thing that has been wrong with the ‘troubled’ company all the while is simply bad, corrupt or incompetent management which you as the new owner can change as you settle down and observe the goings on in the company.
All you, as the new owner has to do is to bring in good management, and institute discipline and best practices, and the company will turn around, and you make your profit. There are so many companies like that today. I repeat, you can easily contact the BPE to look for so-called dead companies to easily purchase and turn around. You should also keep your eye out for such companies in the private sector. There is money in being a turnaround specialist.
What I Do When Buying A Company
What I do when I am buying a failed company is to ask the owners to sign an agreement detailing all the facts about the company; that if I later find out that what they said is not true I will charge them to court to pay me for damages and refund me 50% of what I used to buy the corporation or they pay me 100% compensation. But if what they said was true, no problem at all.
If they sign that I will then bring out my cheque and pay. You must ensure that you have closed all the loopholes and secured all the documentation of that corporation - taking inventories and all that is necessary, get a lawyer to do all the documentation for you; make sure the company is well registered.
You also have to do several meetings with all the company’s stakeholders to find out what their opinion is about the company.
After You Have Purchased The Company, How To Turn It Around
Now, how do we turn around the fortunes of these failed companies after we bought them?
We do what the doctors do to patients that come to them for help, they call it diagnosis. The doctor wants to know what the nature of the illness is, he checks the liver, checks the kidney, is it high blood pressure? Checks the chest, what is causing the high blood pressure? Is there any infection? If he is not too sure an x-ray will be carried to further ascertain the illness and the cause. Then an operation on that patient could be scheduled to save the life of that individual.
That is the same thing we do in the company world, we see a dead company, we want to ask ‘Why did this company fail’? We ask all the various departments of the company what could be responsible for the dead business. Now we all know that it is the report you feed us with as to what led to the death of the company that is what we are going to work with, whether you have to do a surgery, which part do you cut out or cut off, administer drugs. It is the kind of treatment you have scheduled for that corporation that will determine its life.
And when that exercise is going on, most especially when there is going to be some cutting, you will have to experience a bit of shouting and screaming. The shouting in the medical case may be caused by pains; so also in trying to rebuild these corporations there is bound to be shouting and screaming. Some cutting can be sacking of staff.
One of the things you must have at the back of your mind - because I know some of you will want to go and buy dead companies after this event – is that you must be ready for the noise that will be going on about you in your attempt to stabilize the corporation.
Here are some of the things you can do:
Asset Trimming
Most of these companies are over saturated in terms of assets. Many corporations have properties they don’t need, and that also affect them, and as a result slow them down. Take the IMFB case for instance, a building Bar Beach with glass all around.
You don’t need a high rise building to do banking. What a bank needs is financial capability and stability. If you acquire any of such companies, you might consider selling its assets that are not needed. Asset reduction will enable you to raise cash to revive the business.
Take for instance when we bought Newswatch, they told us they had 50 hectares of land somewhere in Ogun State. What are you going to do with 50 hectares of land in the bush? They will tell you they have a 12 story building in Oregun, Lagos State; you don’t need all of that for a newspaper publication. So the best thing to do is to redefine your focus, and let me tell you, you will hear a lot of noise, but never mind, because the end result will shut them up.
Refocus The Company
NICON was focusing on so many things that had little or no benefit to their business. Like most companies do, they focus on things that add less value to them and pay less attention to their area of strength. I am amazed at how that happens and this major killer of businesses - when you deviate from your focus. So we had to ask ourselves what Nicon was setup to achieve. It’s to do insurance, so we have to be clear that first and foremost we focus on insurance.
It will not make sense if you have two legs and one is not allowing you to walk properly - if cutting it will allow you to walk very well and smartly, then cut it off. You must take total decision to save the company. When you buy a dead company you must close up some departments and outsource them if necessary. Make some structural changes; make some operational changes; look again at some of the things each department is doing - which one is still very relevant to the society?
I give you an example: look at Motorola phone. Corporations like getting involved with big, big things. Big projects do not make successful companies. Now if you had a Motorola phone in 1976, 1987 or even in 1996, you were seen as being on top, because that was the phone that was in vogue then. Everybody was flipping those phones round the places. Now where is Motorola today? Nowhere.
The reason is because they had an idea to put phones in the rural areas, and they invested billions of dollars into that project. After completion the people in the rural areas could not afford the phone. Where are all the billions of dollars? Lost!
So it is very important that one doesn’t go into big projects that one can’t manage, or which one doesn’t have the assurance of profit after completion.
Don’t rush into various projects at the same time; do them one after the other and focus on your core area of strength.
Change The Leadership Of The Corporation
When you acquire a dead company the first person that will be a victim of restructuring is the CEO of that company. The CEO must be sacked and this is very important, otherwise the company will continue to struggle. So the first person that will go is the Chief Executive Officer. The CEO is the person running the company down. The next person to sack after the CEO or MD is the head of finance of the corporation.
The second point is the management change: there must be a change of the management staff. But you will not change them or sack them immediately, you will keep them for some time to get information of how things are in the company, because if you sack them immediately, you will be sacking all the information you will need to revive the business.
You have to give them the assurance that you have come to work with them to make things work, after keeping them for a minimum of a year and half, you would have gotten all the information you need.
In this lecture Jimoh literarily demystified his secret of acquiring several billions of Naira worth of companies without putting down any of his money and turning them around by making specific management changes.
Here we have reproduced an excerpt of the lecture hot and sizzling for your enjoyment, and the good part is that Jimoh Ibrahim also says you should be bold and use his strategy to buy companies too. The New Year is looking really bright isn’t it? Enjoy the lecture.
How To Purchase Failed Companies Without Your Money
Most of the companies you hear that I own today, even the multi billion naira ones, I didn’t invest a kobo of my money into buying them. In fact, before buying a lot of these mega corporations that I own, sometimes I didn’t even have any reasonable money in my bank account. And I am about to tell you how I did it, my great business secret and how you too can also do it, because I want to see more Nigerians making it and developing our economy by owning and reviving companies like I have done. Are you ready?
I go for undervalued companies; companies that are dead but have no business being dead. When I spot such a company, the first thing I do is to look for a good bid proposal writer. I approach the person to write a very good bid proposal. After the person has done so, I then approach the owners/sellers of the company, whether it is captains of industry, often the Bureau for Public Enterprises, and submit my proposal. Usually, because of the high quality of the proposal, my bid interests the owners and they accept it. But the next thing is how to pay for the company and how to get the money to turn it around.
By the time my bid is accepted I now approach the banks, showing them the documentation of acceptance from the owner/sellers. I then ask them for finance to be able to pay for and turn around the company. Now this is the kind of news that banks like, and often banks, one way or the other would have heard of my bid success. So, what happens is that they queue up, offering me loans at better conditions, so I then relax and make my choice.
You must understand: For banks it is a win-win situation: Banks love such business contracts and arrangements, and want to come in with financing because they know that the company more often than not has some very valuable assets that will guarantee the loan. They also know they will make money from interest.
So after I secure finance from the banks I go and pay for the company, then the banks hold on to the title documents of my new company, pending when I repay the loan, which is usually fully paid up after several years. Then they give me my title documents and I am now the full owner of a mega corporation which I didn’t invest a kobo of my money in buying. The money paid back to the banks is generated by the company, I never invest a kobo of my own.
So even if I am broke today, I can purchase a billion dollar corporation using this business strategy, and you too can do so.
Today, there are so many troubled companies. All you need to do is to spot one, you can search for such troubled companies with the Bureau of Public Enterprises. If you find one, Don’t Be Afraid! Go for it! You can become a turn-around-specialist and make billions in the process. So, think big! I say you should not fear because the odds are stacked in your favour.
Most of these ‘dead’ companies have assets that are bigger than their cash/share value. So even if they don’t have cash, you can see that they have land that you as the new owner can sell and make profit from while turning the company around. They are in trouble not because they are worthless, but because of bad management, and all you need to do is to institute good management and discipline and you will see yourself reaping billions from a company everybody thought was dead.
They already have a brand name and name recognition in the country, what’s drawing them down is most likely bad organization and management. They also have a dedicated market. For this reason, in fact, I boldly say that it is better to get a troubled company and turn it around than to try establishing one from the scratch.
If you are to buy a ‘troubled’ media company for instance, that company already has a dedicated readership and probably loyal advertisers that have been with them for long. So you find out that the only thing that has been wrong with the ‘troubled’ company all the while is simply bad, corrupt or incompetent management which you as the new owner can change as you settle down and observe the goings on in the company.
All you, as the new owner has to do is to bring in good management, and institute discipline and best practices, and the company will turn around, and you make your profit. There are so many companies like that today. I repeat, you can easily contact the BPE to look for so-called dead companies to easily purchase and turn around. You should also keep your eye out for such companies in the private sector. There is money in being a turnaround specialist.
What I Do When Buying A Company
What I do when I am buying a failed company is to ask the owners to sign an agreement detailing all the facts about the company; that if I later find out that what they said is not true I will charge them to court to pay me for damages and refund me 50% of what I used to buy the corporation or they pay me 100% compensation. But if what they said was true, no problem at all.
If they sign that I will then bring out my cheque and pay. You must ensure that you have closed all the loopholes and secured all the documentation of that corporation - taking inventories and all that is necessary, get a lawyer to do all the documentation for you; make sure the company is well registered.
You also have to do several meetings with all the company’s stakeholders to find out what their opinion is about the company.
After You Have Purchased The Company, How To Turn It Around
Now, how do we turn around the fortunes of these failed companies after we bought them?
We do what the doctors do to patients that come to them for help, they call it diagnosis. The doctor wants to know what the nature of the illness is, he checks the liver, checks the kidney, is it high blood pressure? Checks the chest, what is causing the high blood pressure? Is there any infection? If he is not too sure an x-ray will be carried to further ascertain the illness and the cause. Then an operation on that patient could be scheduled to save the life of that individual.
That is the same thing we do in the company world, we see a dead company, we want to ask ‘Why did this company fail’? We ask all the various departments of the company what could be responsible for the dead business. Now we all know that it is the report you feed us with as to what led to the death of the company that is what we are going to work with, whether you have to do a surgery, which part do you cut out or cut off, administer drugs. It is the kind of treatment you have scheduled for that corporation that will determine its life.
And when that exercise is going on, most especially when there is going to be some cutting, you will have to experience a bit of shouting and screaming. The shouting in the medical case may be caused by pains; so also in trying to rebuild these corporations there is bound to be shouting and screaming. Some cutting can be sacking of staff.
One of the things you must have at the back of your mind - because I know some of you will want to go and buy dead companies after this event – is that you must be ready for the noise that will be going on about you in your attempt to stabilize the corporation.
Here are some of the things you can do:
Asset Trimming
Most of these companies are over saturated in terms of assets. Many corporations have properties they don’t need, and that also affect them, and as a result slow them down. Take the IMFB case for instance, a building Bar Beach with glass all around.
You don’t need a high rise building to do banking. What a bank needs is financial capability and stability. If you acquire any of such companies, you might consider selling its assets that are not needed. Asset reduction will enable you to raise cash to revive the business.
Take for instance when we bought Newswatch, they told us they had 50 hectares of land somewhere in Ogun State. What are you going to do with 50 hectares of land in the bush? They will tell you they have a 12 story building in Oregun, Lagos State; you don’t need all of that for a newspaper publication. So the best thing to do is to redefine your focus, and let me tell you, you will hear a lot of noise, but never mind, because the end result will shut them up.
Refocus The Company
NICON was focusing on so many things that had little or no benefit to their business. Like most companies do, they focus on things that add less value to them and pay less attention to their area of strength. I am amazed at how that happens and this major killer of businesses - when you deviate from your focus. So we had to ask ourselves what Nicon was setup to achieve. It’s to do insurance, so we have to be clear that first and foremost we focus on insurance.
It will not make sense if you have two legs and one is not allowing you to walk properly - if cutting it will allow you to walk very well and smartly, then cut it off. You must take total decision to save the company. When you buy a dead company you must close up some departments and outsource them if necessary. Make some structural changes; make some operational changes; look again at some of the things each department is doing - which one is still very relevant to the society?
I give you an example: look at Motorola phone. Corporations like getting involved with big, big things. Big projects do not make successful companies. Now if you had a Motorola phone in 1976, 1987 or even in 1996, you were seen as being on top, because that was the phone that was in vogue then. Everybody was flipping those phones round the places. Now where is Motorola today? Nowhere.
The reason is because they had an idea to put phones in the rural areas, and they invested billions of dollars into that project. After completion the people in the rural areas could not afford the phone. Where are all the billions of dollars? Lost!
So it is very important that one doesn’t go into big projects that one can’t manage, or which one doesn’t have the assurance of profit after completion.
Don’t rush into various projects at the same time; do them one after the other and focus on your core area of strength.
Change The Leadership Of The Corporation
When you acquire a dead company the first person that will be a victim of restructuring is the CEO of that company. The CEO must be sacked and this is very important, otherwise the company will continue to struggle. So the first person that will go is the Chief Executive Officer. The CEO is the person running the company down. The next person to sack after the CEO or MD is the head of finance of the corporation.
The second point is the management change: there must be a change of the management staff. But you will not change them or sack them immediately, you will keep them for some time to get information of how things are in the company, because if you sack them immediately, you will be sacking all the information you will need to revive the business.
You have to give them the assurance that you have come to work with them to make things work, after keeping them for a minimum of a year and half, you would have gotten all the information you need.