EDUCATION BLOG

Hi. My name is Rick Russell. I’m a computer support professional, a computer hobbyist, and a business student.

Over the years, I’ve developed some strong technical skills, and I use those skills every day to help folks trying to make sense of computers and technology in my day-to-day job.

Now I’m embarking on a new adventure. I’m getting a Masters of Business Administration and it’s my goal to assimilate both business and technical concepts and explain them in a way that makes sense to regular folks. Eventually, I’d like to get a job in the venture capital business, using my technical knowledge to help financiers make good decisions about where to put their money.

Today’s discussion is about LAVA, the Los Angeles Venture Association. I recently joined LAVA so I could attend their monthly executive breakfasts. Each breakfast features a cast of business superstars. The next breakfast features Richard (Dick) Heckmann, an entrepreneur who has managed to build real economic benefit out of the merger & acquisition process. He’s identified inefficient companies with good technology, merged them together to make better products, make them more competitive in the global market, and ultimately build true economic value.

I think that when the average person thinks of a merger and acquisition specialist, they think of the classic 80s “greed is good” type whose only desire is to maximize accounting profit, no matter who suffers for it. Today, that characterization simply doesn’t fit. M&A specialists realize that investors — particularly big institutional investors who have the money to pay for good analysis — aren’t going to be fooled by a tweaked balance sheet and a chopped bottom line. They are looking for investment opportunities that create true economic wealth that will hold up in the long-term ten to thirty year time frame. They don’t want to invest in capitalists whose only goal is cut employees for a short-term boost in profit.

Enter modern M&A specialists like Heckmann. He has made wealth by identifying inefficient economic sectors, and using the acquisition process to build more capable, more efficient enterprises. He made his first big money in the water purification industry, when he recognized that municipalities all over the US were paying big money for expensive, inefficient customized solutions for water treatment. He addressed that need by buying a water filter company and acquiring more companies with good technology, then integrating the technologies into an easily deployed service for municipalities. The resulting conglomerate, US Filter, offered a complete package of well-designed water treatment solutions that eliminated the need for expensive, custom-designed one-off treatment systems.

The result: better quality water at lower cost for everyone. That’s capitalism in action. The same capital disbursement mechanisms are being used to develop cutting-edge technologies in every sector. If there is any hope of disconnecting the US from the politically charged stream of foreign oil, I think that hope lies with venture capitalists.

Anyway, I’ll be attending the LAVA breakfast in about 10 days and post a review of the information I obtain there.

Rick R.