Conversations with Thought Leaders from the M&A Community

Doug Rodgers - The World Takes Center Stage

Posted by John Slater on February 4, 2008

Doug Rodgers - The World Takes Center Stage: Play Now | Play in Popup

Like many of you in our industry, I have spent the last month trying to understand the impact of the credit squeeze and the equity and debt market declines on the M&A market. I don’t purport to have the answer to where the stock market will be next month or even whether we are going to really have a recession (though my personal guess is that we’ve been in a mild contraction over the last ninety days and if we’re lucky we may already be nearing the end of the slide).

What I do see clearly is that the current events are part of a much larger picture in which the U. S. economy has become a major player in a multipolar world and no longer the dominant economic factor in the world scene. For an interesting perspective on this subject, read Parag Khanna’s article in the January 27, 2008 New York Times entitled Waiving Goodbye to Hegemony.

Even more important to our industry is the coming emergence of the transnational corporation as a dominant force in world economics. I purposely use the term transnational rather than multinational, because these future behemoths will no longer be tied through ownership or political control to any specific nation or even any specific regional bloc. Their operations will be spread around the globe reflecting customer markets and the comparative economic advantages of specific regions such as the relative price and availability of various inputs, including labor, capital and raw materials and the relative friendliness of various political regimes. Headquarters can be anywhere or everywhere and the country of incorporation will depend on factors such as local tax policy and the availability of a supportive legal system. What all of this means to our political and social institutions is best left to others to decipher. What it means to us is that over the next fifteen years we will witness a pervasive wave of cross-border M&A. In industry after industry it will no longer be sufficient to be the leader in a local market, country or even region. Success will require global presence and global presence requires consolidation.

At Focus LLC we are witnessing the early stirrings of this trend today in our own practice. Over the past year and a half approximately half of our closed transactions involved a non-U. S. buyer from countries as diverse as India, Germany, Portugal, Sweden, the UK and Canada. Doug Rodgers, Focus’s CEO, recently published an opinion piece in the Washington Business Journal entitled “Fear not the Foreign Investor” in which he makes the case that overseas investment in the U. S. economy is not only a reality of the current world, but is good for our economy. In this week’s interview Doug expounds on his ideas in this regard and provides an overview of the new world of transnational M&A.

Length: This interview is about 21 minutes.

Categories: Intermediaries, Industry Sectors, Strategic Buyers, Private Equity, Business Sale, Business Acquisition, Audio