Thursday, December 31, 2009


To lend or not to lend?  To borrow or not to borrow?  Those are the questions.
Whether 'tis nobler to accept the financials at face value, knowing them to be at best the company's rear view mirror.  Or by looking deeply into its soul*, to predict surely its future performance.

There are just a handful of organizational forces that determine - and therefore PREDICT** - the performance of a company long before that can show in the financials.    Longitudinal studies by McKinsey and London School of Economics, now of more than 4,000 companies, have shown that changing just three of these forces by 20% changes the bottom line by 40%.

Knowing what they are, having hard-number values for them, makes lending an order of magnitude safer than with financials alone.  And provides the borrowing company the information it needs to seriously improve its performance.  And assure its ability to service its loans.

With so many current and potential borrowers likely to be struggling, every corporate lender should know what these organizational forces are; should know how to measure them; should know, at the very least, how to estimate them.

For 25 years we have quantified these organizational forces in terms of a Balance Sheet and  P&L.  We have also helped more than 200 organizations predict (and transform) their performance.

We have now created training programs to familiarize managers and lenders with these forces and explain how to measure them.  The programs vary from one-hour presentations (great for introducing the research and concepts at working breakfasts or lunches) to one-day retreats.

We would like to tell you about them. 
*         Operating Dynamic
**               Predicting and Preempting the Corporate Heart Attack

Thursday, December 24, 2009

The Post Acquisition Due-Diligence

When all is said and done, the fundamental driver business performance is not its finance nor its strategies nor its operations; these together are responsible for less than 20%.

The real driver is something else. It is its Operating Dynamic
©, its Will to Compete. That complex of organizational and human factors that drive/impel behavior, generate performance and are finally responsible for success or failure.

No investor would enter into an acquisition without an in-depth financial and operational due-diligence audit. Yet, with almost every acquisition, decisions are made - and have to be made - in almost complete ignorance of that which is responsible for 80% or more of performance. Guesswork and hunches are the order of the day.

Investors make their acquisition decisions on the best information available and then wait... And wait... And hope... Because understanding what the operating dynamic really is and the impact it has on performance takes time. Lots of time.

Until now it has been thought that that was the way it had to be. It was felt that the technology to open the soul of a company to its new owners did not exist.

Happily, this is no longer true.

A Post-Acquisition Due Diligence
© is now possible. A due diligence that will expose to the light of day the real and often hidden drivers of performance, and do so for the company as a whole and for each of its units.

The cost is affordable, the effort required by the acquired company is minimal, the time to do it extremely short.

And the potential ROI remarkable.

For information on the Post Acquisition Due Diligence, contact Tom FitzGerald at 847-599-9960 or fitz @

For information on FitzGerald Associates and background on the diagnostic instruments visit their web,