Speak to the Man Called Hope. Lawrence Hall
need for a piss. Seeing Stu and Kelly off to Mo Browns is the last thing Ro can remember. Luckily he made it to a taxi and was able to tell the driver where home was. He has no idea what time he made it home and into bed but it was well after midnight. He wonders what happened with Stu and Kelly. Perhaps the luckiest thing was that he heard the alarm at four o’clock in the morning and that he did make it into the shower. Certainly the over-sized individual who appeared in the aisle glancing at the seat next to Ro wasn’t too impressed by the alcoholic odour.
Ro was holding his third coffee when he entered the foyer of Jonathan Forest Discount Brokers. Sam, Clint, Jarryd and Tina were waiting in the Board room. Ro joined them not long before Jonathan and his entourage walked in. Ro was summonsed to the Product forum to discuss the operating model and product set, Clint joined the Corporate forum, Jarryd the technology forum and Tina the people and governance forum. The intent was to spend the day defining how each of the forums would operate in the combined entity, what were the key issues to be addressed, the potential cost and timeline required to make it happen. This information would be used in the terms of the deal upon acquisition. Jonathan and Sam would be joined by Alfie from Everton Marks in the Board room to discuss terms and executive roles and responsibilities going forward. Jarryd led the discussion on what the platform would look like. It didn’t take long to work out the effort to transition the technology from Jonathan Forest to Mason Thompson would be significant. Integration of the technology into Mason Thompson and the need to migrate the Mason Thompson data from Atkins Robertson to the Jonathan Forest platform were the two main issues. Possibly twelve to eighteen months and a cost of around $30million. Tina needed to consider the people changes, how many people would be required, which people may stay and which may go, estimating the cost of redundancy at about $10million and taking about three to six months to transition the Jonathan Forest people to Mason Thompson people systems including payroll. Governance would strictly follow the Mason Thompson framework and transition of existing lower quality governance systems and processes would take time and money but only about two to four months and cost about $1million, probably less.
Ro’s time in the product forum was extensive and exhaustive. Much of the time was spent with him explaining the existing business and operating model with Alex the COO from Jonathan Forest doing the same.The product set would imitate the existing product offering Mason Thompson has, getting as many deposit funds on the bank book as possible, paying a low interest rate, maximising profit margin for the business. The customer set, with active customers being mostly highly active traders means much of the revenue is centred on brokerage revenue rather than sourcing revenue across a diverse product set such as deposits, lending, foreign exchange, international share trading and asset management fees. The idea of the cross sell to Jonathan Forest customers raised many an eyebrow. The upside was that the Jonathan Forest offered better trading experiences for high frequency trading customers of Mason Thompson, but this was one per cent of the client base. It's good revenue but highly correlated to the stock market volumes. A lack of volatility would see trading volumes and revenues fall by half or even more. Mason Thompson invested much time and effort with Atkins Robertson to diversify income streams to those more reliable, more predictable such as deposits.
Lunch was provided but Sam had requested the deal team meet at the cafe down the road straight after the forum meetings to debrief on the mornings discussions. They would then be back to participate in lunch. Sam came to the conclusion that the deal was quickly heading to $150million with all the transition costs, acquisition cost of $80million, maybe more and extra internal project costs associated with completing the move to the new Jonathan Forest platform. Costs incurred by Atkins Robertson to co-ordinate the move from them to the new platform would be around $10million plus any potential termination and contract break costs which Clint was working through.
The afternoon was spent with each team presenting their findings to the combined group with questions coming from Jonathan and Sam as well as cross-forum questions being raised.
Ro was exhausted. He was keen to get back into a taxi and head home. Jarryd made a claim that he could only get a booking on a 6 o’clock flight and needed to leave right on five o’clock. Tina quickly advised that she needed to catch a taxi with him. Ro, despite the looks from Sam, was going to catch the taxi with them.
‘No worries’, Sam interjected, ’I’ll need final reports by close of business tomorrow so I can finalise the deal bid by Thursday. It needs to be approved so I can lodge it with Everton Marks by Friday when the bid process closes.
‘Have you heard anything about the other offer from the futures trading company?’, Ro added.
‘It sounds like their bid is going to be well over $100million’, replied Sam with a questioned look on his face. He believes it's quote is high.’They’re very keen to get into this market. It's a high price’, he continues.
Clint leans forward, ‘so are we in with a realistic shot at $80million?’
Sam rocks back on his chair, lets out a deep breath and says ‘If I was Jonathan Forest I wouldn’t be knocking back $20million or more to be bought by a bank. He’ll only be around for twelve months as part of the deal transition and then he’s off. Who knows’.
‘Before you go, we are on for negotiations with Oakbank next week.’ I’ll need you all available and ready to swing into action. It’ll be more extensive and intensive conversation so come prepared.’ Sam finishes.
The taxi ride to the airport was more gruelling than the all day workshop. Tina and Jarryd asked many questions about the deal. They haven’t had the exposure and insight that Ro has. They can’t understand what the attraction is with Jonathan Forest Discount Brokers. Ro admits that after all the due diligence work and the workshop today he’s beginning to wonder why as well. He feels that Sam has already moved onto the next deal anyway. Jarryd and Tina ask about Oakbank and the details of the deal. In this case, Ro advises that he is no wiser than they are.
The taxi pulls into the drop off zone at the airport. The driver pulls the lid to the trunk. Tina scrambles out eager to retrieve her carry on suitcase from the trunk, as if someone was about to take it. Jarryd reaches in and grabs his out as well. Ro stands waiting on the pavement.
‘Did you fly up last night’, he asks. Holding just his folder. He didn’t pack anything.
‘We did’ responds Tina, ‘I live too far from the airport to travel intraday.'
‘I came up yesterday morning and spent time in the office yesterday to catch up with some colleagues.’ Jarryd adds; feeling if he has to justify the expense. Ro isn’t fussed. The initial $6million budget given to Sam was to cover expenses like this.
They cleared security swiftly. Ro changed direction heading toward the club lounge. He quickly noticed Tina and Jarryd watching him. The penny dropped. They didn’t have club lounge membership. With all of Ro’s travels he had automatically qualified for free club lounge access.
‘I can get two people in with me. Did you want to come into the club lounge for quick drink?’ he asks.
They look at each other before Tina acknowledges the gesture.
‘That would be nice, thanks Ro’. she says.
The last thing Ro feels like is another drink but a glass or two of red wine might just set him to sleep on the plane.
Ro was in the first row behind business class but Tina and Jarryd were toward the rear of the plane. no sooner had the jet left the ground that Ro was fast asleep.
No sooner had the plane landed and Ro switched on his phone that a voice message appeared. It was from Roland, his commercial manager counterpart at Atkins Robertson. Before he listens to the message Ro sends a message to his mum that he had landed and would be home within the hour. Whilst Ro hadn’t divulged the strategic intent Roland was aware that Mason Thompson wouldn’t be comfortable with a major competitor bank now owning its broking service provider. Roland was of the view personally that Mason Thompson would do something and that would be initiated by contract termination. Roland was forthright in making his intentions known. He’s looking for another opportunity, he’d love to be involved with something new and he’s