Allen Lane

Case Study – Allen Lane
a) What did he do right?
- Defined what he wants to do & not do
- Doesn’t want to buy a business that doesn’t fit his skills
- Brought a partner along to share the burden
- Pro-active in contacting companies, building network of contacts & establishing excellent relationships – financing; business brokers; industry experts (etc); establishing guidelines for selecting lawyers
- Did not compromise on his integrity – impeccable reputation is essential (i.e. your book is being written…)
- Worked hard/relentlessly on business plans
b) What did he learn as the process progressed?
- Disadvantages of buying a publically traded company; legal & accounting fees are higher & sunk cost.
- Disadvantages of buying small business – that often have undervalued inventory; sellers like to sell the stock as well – buyer gets stuck with liabilities.
- He could not compromise his integrity & cannot enter a business deal no matter the seemingly “advantages” of playing with numbers (i.e. exaggerating net worth etc), it’s dishonest and doesn’t make good business sense. As the deals & months went by – he learned to be much more thorough in his research & more diligent.
- The formula that secured lenders use to determine company’s financibility
- The importance of “ham & egging” – getting financial commitment before the commitment of the selling company & vice versa.
c) How have the years since Allen’s graduation from Business School made him more or less well-suited to running his own company?
- Working for different companies, he acquired operation-based experience (Wagner; Consultancy firm) & managerial skills (James) – he developed a variety of skills that are valuable for running a business.
- Working for different companies gave him a sense of what he’s looking to acquire – industrial distribution business – instead of buying any