Due Diligence – Commodites

I have mentioned this before, but my my perspective as a participant is that the most important first steps in any possible deal is due diligence … not only of the buyer (if possible at this stage) but ask for their source and the verification of all the information that a “contact” brings to you from their own communications.

These steps are essential in my view ..

  1.   What is their position in the chain of people who have brought the deal to you? If someone is more than one or perhaps two people away from a mandate or a buyer … it will be highly unlikely the deal will proceed … if you are a contact make sure you verify formally where you are in the chain with the buyer… also if you wish to be paid, make sure that the Buyer or their mandate authorises you to offer their requirement to your contacts.
  2.   What work have your contacts done to ensure the “buyer’s” veracity? and what have they accepted without question from their contact – this all reflects on the credibility of the contact and the possible deal itself.

Other Important points are :

What form has the enquiry come in? Verbal, a written via a general letter of Intent or letter of interest …. or via a Bank, a Hedge fund or trading platform – first step in to check when the enquiry was issued, if it is out of date ask for enquiry with a current date. Then contact the issuer to confirm it is valid.

Our first step after we have done the above is to ask for a profile of the buyer, then once received, do due diligence on the information therein – first thing is to check for dates, as so many times statements provided in these briefs can be verified or not by doing a simple google searches for location of offices, Corporate Officers and company registrations are fairly straight forward … also then search for corroborating articles in relevant news sources, concerning the alleged buyer. If no articles are found it is likely the whole enquiry is a fiction. If you have any doubts I would suggest contacting a due diligence service before you take it to a seller.

Statements made in concerning say tank storage can be verified, the easiest way is to do this is check with the relevant port facilities.

If you are a seller or direct to a seller, insist on talking to the buyer or the mandate … if you do not get the information from a gatekeeper, the least stressful option is to insist on the contact, if it is not provided, walk away.

If a contact insists on having a commission agreed to before connecting you, it is way to early for this, as the commission for the buyer side is specified by the buyer mandate … issuing a commission split before you have had an contact with a buyer, is basically a waste of time, the buyer or the mandate will specify who will be paid and how much, the seller mandate only controls the commission on the sell side, although in some circumstances I have agreed to allocate an amount to a buyer contact, the amount of which varies greatly but the basis of it comes down to what work they have put into the deal, if someone has taken an enquiry from their inbox and sent it out without any due diligence, which means we have to do all the work, then if a deal culminates the commission would be no more than a small spotters fee … nothing is for free … if a contact wants a commission he has to have actually contributed to the deal.

For me I will give a contact two chances …. for every deal that does not complete affects our own credibility with the supplier or refinery … hence if a deal does not complete due to a foreseeable error or oversight, you get one more chance and then we shall no longer engage.

Although this post actually applies more to Oil, minerals & other refined commodities as well as crude Oil, this general procedure also applies to such items as Gold, both bullion and unrefined such as Dore bars and nuggets … if you have any interest I shall post on this topic in the future … in the meantime, I wish you every success.

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Engagement & Content

Content of an interesting discussion …. starts the thought processes !

My thoughts at the moment, seem to be focused on “engagement”, the reasons why we aren’t and the bigger picture of flawed corporate cultures caused by basic systemic issues … as I said in the feed yesterday “Everyone is connected, but are we really connecting ?” – I think not .. or worse if we are … we are not listening. I have some views on the reasons for this … but it amazes me that organisations including governments seem to just go through the motions and are seemingly indifferent to the reality .. which is why their stakeholders .. us .. are not engaged (normally) with their strategies … this comes down to the education of the “masses” as well, as for the Gods in the marble halls – we are just too ‘aware’ for their own good.

However with the fragmentation of the mass market in all areas, including mass media, the outcome for me is that instead of organisations making systemic changes to move with the social and technological changes to improve their internal cultures and thus the engagement and transparency with “us”, they basically keep going the way they are going, and one day when the financial world is sorting through the carcass of what were “great” organisations (including governments probably) … they will ask .. too late .. “How did this happen” ?

To cut a long story short, there has to be change in the way things are done … we all need to realise that so far as the Universe is concerned we don’t amount to a hill of beans as individuals (but together ?? ) … as Carl Sagan said in his own meditation … we are just this little blue dot in a relatively small galaxy, within the infinity of the Universe, that’s the reality of our significance … numberless blades of grass or the grains of sands on every beach … in every world springs to mind …

So what can potentially makes us different .. one thing, which is “what if” we believed in engagement with each other, in true transparency (not just the words) we can become magnificent working together .. so what exactly is stopping us .. fear of “everything”, ego .. perhaps !

But we need to start, with one small step, how about within your own circle of influence, and then the circle will grow, and soon (this relies on engagement) .. we have the ability to foresee the magnificence which can be a social engaged one world … utopia, even possible ?? … it must be possible as I can see our potential …probable .. I hope so .. I hope I see the start of it before my time is over .. well this time around anyway.

There needs to be one thing, a world wide social revolution, that holds Governments at all levels accountable and likewise all levels of business … how about we bring all levels of abuse and inequity to the surface …. without all of the hype and b/s of the news organisations who are basically there to sell their own product, their content… so we come back basically to transparency and accountability … so long as there is a “rating” to be improved .. we cannot trust in the ethics of the organisation, who are only motivated by money .. for me (now) money is like the mythical pot of gold at the end of the rainbow .. when you get to it, there is nothing there … and I can tell you from personal experience that money and materialism does not make you happy … but I guess that is something you need to find out for yourself.

By the way, if I hear one more time, “We have always done it this way … “ but this is my point exactly … and here you are talking with some organisation that is in need of change, sometimes surgical change. In any organisation, you must be proactive and always be curious and strive for excellence. To drive policy … that is the function, or it is supposed to be of the Board / owner and the CEO .. to work on the question .. here is the direction we we want to go, how do we get there ? Too many CEO’s work in the company and therefore never understand the reality which is that their company is not entitled to anything .. they may have the best / greatest most exciting wiz bang product or idea in the Universe, but unless you really engage with your market, (before – you take it to market, so they are part of the process) – it will rarely succeed.

This post seems more about engagement rather than content … so next time .. content for your publications …

Ok .. time for my exercise …

News Limited – the "Daily"

I know that it is the essence of business to explore every option, but this niche opportunity that News is exploring to me verges on wishful thinking.

With the introduction of a new product for a very limited closed product market, namely for the Apple iPad. A very niche market … So what happens when a new hardware tablet is produced, a new “Daily” ?

A brave new venture to say the least, in my humble opinion the likelihood of payback and ultimate success is remote, when there is so much other content out there (all accessible via RSS and free),as well it harks back to the old media mentality of a closed channel for information. This is not how it works, and it is not viable to think that way anymore. Nor are pay walls … but that is seriously another discussion about flawed market strategies and tactics altogether.

In their favour News Limited / Fox will be able to provide a very wide and diverse content from news, comments and media content, but will that be enough, my view is that you cannot transpose old media structure on the internet, its about time that Fox and News Limited actually woke up to this. The internet is not about closed systems., something also which Facebook will learn, if it doesn’t evolve.

Concerning the future, if there is one, The Daily itself, will News have control over content –  or will Apple have some say ? Is it going to be skewed or politically biased like other News Limited content ? Also advertising on a subscription service will be needed to create long term viability –  would you pay for a subscription and at the same time be bombarded with advertising ?  Or turn it around, offer the subscription to the magazine without Adverts or no subscription with adverts… and why only for the iPad .. ?

The only good things that I see here is that News is doing it at all – it will have to evolve or die (after MySpace and their fiddling and controls .. what of this ? ) the thing that is innovative about this new venture, is that a subscription service actually exists to provide content under the Apple iTunes / Apps store, now that is a a new horizon to explore.  Good luck with that.

Google – Was it Hubris or Hype ?

Google Vice President, Linus Upson, recently told The New York Times that when (?) the Chrome OS deploys, some 60% of all businesses could get rid of Windows for good and switch to Chrome overnight.

I think this article below gives a balanced look and asks some pertinent questions about this revelation which seems to be full of hype about the second coming.

If the following report here from Renee Oricchio is any indication –

I think that Google has a problem. It’s called arrogance! or in this case one might even be called hubris, for your information this word is defined as “ being out of touch with reality and overestimating one’s own competence or capabilities ”

If you don’t believe arrogance can fell an empire, just go back and study World War I. or for a more recent cautionary tale, look at Wall Street over the past couple of years and the resulting Global Financial meltdown.

I regard Google as a very good resource, however the idea of cloud computing from a risk management point of view is a nightmare waiting to happen …. cloud storage as part of a strategy yes, but as a end in itself, no thanks definitely not at the moment. There are way too many points of failure within the access path and when there is a failure within the network or with Google, what exactly would you have left of your business ?

Comments Off on Google – Was it Hubris or Hype ? Posted in Opinion, Strategy

Political Reform – a great idea

I sometimes wonder if there any lights on upstairs in Canberra, it proves again how the politicians have no idea what the effect of their rants are in the real world or the effect of these pontificating of such impossible Taxes (Yes, let’s call it a tax, because if it looks like a tax, and sounds like a tax then ….).  This single proposal has the effect to take away our insulation from the effects of the global downturn, and the ongoing deficit problems not to mention deflation (which if it is by itself, may not be a bad thing in the long term).

As I have mentioned before, you cannot dictate to companies of the size of BHP Billiton etc… a true multi-nationals… without consequences – these companies have projects and investments globally. Adding this tax will have an immediate effect on their viability (of their Australian operations). Australian coal, and Iron Ore etc are already amongst the most expensive in the world… they cannot increase the price (especially after completing negotiations recently in China) – so they will focus their future focus outside of Australia which will mean less sales in the medium-long term, what is going to support the Australian dollar and the Australian economy then… Labour financial modeling? I don’t think so… but I am sure the Labour party will spin it so it is someone else fault… Politicians have a convenient short term memory, especially when it comes to their own mistakes.

Perhaps we should have some political reform;

(1) Ministers have to actually know something about their portfolios

(2) End.. political careers (State & Federal), there should be a limit of say 3 terms on any politician, Upper and Lower Houses

(3) Politicians have to spend “x” years in the business / commercial world before their stint in Canberra

(4) Stop this favoritism for the Super funds for Canberra… after all it’s a temp job… like any other.

(5) Run the country like a company for the benefit of its shareholders / citizens, because you are dealing in people’s and their children’s lives as well as their future here – not to mention the countries future.

I always thought that the Labour dream team, financially were away with the pixies, and I think except for the pragmatism of Julia Gillard (she has to lose the “them and us mentality”, after all, she is a representative, not only of the Labour party but of ALL Australians…but I have hopes), they really are. I have never had a lot of economic respect for the ability of Swan who does have few innovative thoughts about the economy, but now Rudd has showed the flaws in his leadership style.

However, I am not prepared to swap the financial irresponsibility of the Labour party yet … because that would mean we would need to give the keys of the country to Abbott, and I see no upside there… but if the opposition actually do get a credible leader then all bets are off.

Poland – a choice

My sympathies go out to the Polish people, friends and family of those travelling in the jet that crashed and killed the Polish President Lech Kaczynski, his wife Maria and many of the country’s political elite. In the upcoming weeks, the Polish people have a choice, lets hope they choose well for the future of Poland.

Please see the article from the Times here

As well a brief profile of the President and further background from France24.com is here

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A view of the USA, today

Currently with all the necessary hype, the compromises and the deal making, the senate looks as though they will pass the unemployment support and Health assistance as per the following link from USA today… but again we come back to the essential problem that we have with the USA, if they were a person they would be accused of a felony as they are writing unfunded cheques.

Who owes the US debt ?  China, Saudi, Japan..!  I guess I have said enough.

With the disclosed long term liability of the USA sitting at in excess of Ten(10) Trillion dollars and the Un-disclosed amount , probably ten times this. The USA is in all sorts of a mess.

Currently instead of an lessening of the unemployment rate, we have the USA getting worse, see the figures below (an extract) and the link to the Wikipedia information here

European Union European Union 9.3
Burma Burma 9.40
India India 9.50
Croatia Croatia 9.60
Hungary Hungary 9.7
United Kingdom United Kingdom 7.80
United States United States 9.70
Russia Russia 9.9
France France 10.0


So much for the USA doing something constructive to resolve their problems, instead of concentrating of the income issue and increasing the amount of money coming into the coffers by putting people back to work – they have spent untold billions writing cheques for programs they have no way of funding without going further into debt… and making the strategic policy of the USA subject to influences from Beijing, Tokyo and Riyadh.  Meanwhile, those people that have traditionally supported free enterprise (I am not talking about the Republicans here) and are working all the hours that are possible to create a income, find themselves being taxed into oblivion..

Not only now, has main street paid the money to support the generosity to banks and corporate America (without it seems, any conditions) – now the disposable income, increasing the likely hood of unemployment becomes real to millions of Americans – but what are the consequences on the children… do they get the vocational or scholastic education they need to drive the USA back to a semblance of their former self, or will the USA make the mistake (if they haven’t already) of becoming a third word country, full of uneducated people – with no prospects of employment. However at least it may stop the movement of jobs overseas to China and India… don;t really believe that myself. Because the real issue in USA corporate culture is that they only think in 3 month chunks, they have no long terms view, therefore they are not investing in the future, by investing now.

More to come soon… or why there will be in another financial crisis…