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Subject: Re: UKNM: Wimps?
From: Sean Phelan
Date: Mon, 26 Oct 1998 12:13:23 GMT

At 3:50 pm +0000 23/10/98, Richard Houston wrote:
>And while we shoe-gaze, we are being colonised. Within hours of one other,
>Amazon arrives, Expedia arrives, Razorfish swallows up (sorry "merges with")
>Friday afternoon it may be, but I find this a bit depressing. Are we going
>to just lie down and take it? Do we suffer from a fundamental lack of
>ambition this side of the water? Maybe David Bentey, Jim Sterne or someone
>else with lots of air miles could give us the benefit of their
>trans-atlantic wisdom.
>-- in case anyone feels childish enough to have a pop at me for working for
>a US owned company, please don't bother. we know you know. well done --

Hm; I thought inward direct investment was a Good Thing? And if you want to
see it as Us/Them rather than a vibrant global market, remember that what is
happening in the cases you describe is that US money is spent employing Brits
creating content and providing services for Brits and for export to the world.
Surely these are all Good Things, and especially for the founders of firms
like Sunbather that (presumably) receive an enormous premium on their equity.

Anyway, aquisitions generally make sense for firms with a low cost-of-capital.
US firms are aquiring UK firms because the Accquirers have a lower cost-of-
capital, and have investors that see market share as way, way more important
that short term operating profit. I'm sure the aquirers also talk about
"synergies" of various kinds, but I doubt if anyone believes them.

Having said that, I have just got back from yesterday's Red Herring workshop
in Boston (out Saturday night; back Sunday night and straight in to the
office; insane? ) and I have to say that the availability of really high
quality expertise and advice, funding options, exit strategies and general
understanding of the commercial underpinnings of the internet phenomenom
were way beyond what I find here in London. These also help, perhaps just
as much as the availability of relatively cheap funding.

Of course, if you are not in the US, London appears to be the best place in
Europe for new media finance expertise (though Israel seems pretty
vibrant). Broadview have an office here, and appear to be doing quite a few
of those transatlantic M&A deals. Though, sadly, there doesn't seem to be any sign
of US venture capitalists setting up here.


Sean Phelan seanatmultimap [dot] com http://www.multimap.com
phone (within UK): 0171 433 0460 fax (UK): 0171 209 5194
phone (Int'l): +44 171 433 0460 fax: +44 171 209 5194

  Re: UKNM: Wimps?, Stefan Magdalinski

  UKNM: Wimps?, Richard Houston

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