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This is my diary....what I make sense of, around me. You'll find short prose on contemporary topics that interest me. What can you expect - Best adjectives? …. hmm occasionally, tossed around flowery verbs ?…. Nope, haiku-like super-brevity? … I try to. Thanks for dropping by & hope to see you again

August 25, 2008

Private Treaties

Going through recent media reports I came across NEWS about how media houses were ganging up to offer advertising space to buy equity stakes in small companies. Commonly called SME, small business houses are being approached by media conglomerates to offer media space as a currency to buy latent wealth in a quid pro quo arrangement. Call it a new age commercial bartering or a meeting point of vested business interests, the trend is visible in the management space too, consulting firms bartering management services for equity stake commonly called sweat stakes in small companies. 

The commercial terms of these so called ‘Private Treaties’ makes for a compelling business deal, a win-win situation for all it seems. SME’s who were looking for publicity but could not afford to pay in cash can now find a messiah in the media houses. The latter will provide strategic media space that can reap commercial benefits for these companies in the form of brand equity building, subtle product and service message delivery to intended target segments and not but the least, enhancing the PR quotient of the promoters. 

Even the stock markets of late have taken a liking for News & views of small quoted companies, a ground for good speculative trading with media in tow. Similarly in the Management space, small companies can avail Management bandwidth & Networking skills that normally eludes them.

Whether its media houses or fancy Consulting firms, it’s all about recognizing the ‘hidden value’ of these companies and unlocking them by extending what appears a generous helping hand. Of course strings are attached; the promoters have to cough out 2-20% stake for these angels which eventually would mean a windfall gain for promoters when these companies grow to the next stage in an emerging economy.

What drives this kind of deal making? Jack & Suzy Welch have an interesting insight to this,”Blame the fierce competition of the global marketplace. Too often, deal heat is inexorable especially if there are other contenders in the ring”.

Whether such arrangements has a bearing on the impartiality of media and their primary business of fair reporting without bringing any conflict of Interest is a moot point . On the other hand can Management consultants be impartial and objective without being affected by ownership frailties in such scenarios?

SME has suddenly become a focal point of interest and attention to a whole new generation of evangelists masquerading as value partners, mentors, turnaround specialists, growth agents, catalysts, and what not. A truth to whether they measure up to their lip services can be found in the details of their so called working terms & conditions for engagement. These guys in my opinion are essentially Corporate miners who see SME’s as the next treasure trove for making quick money. 

A lot of parallel can be found in History books which is replete with tomb raiders masquerading as archaeologists, treasure hunters seeking distant sea shores in the garb of merchants & spice traders and so on. So it’s all about history repeating itself with new jargon's & mumbo jumbos suited for the current digital age.
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