There are so many great presentations from Stanford Business school. This is a lecture from Dick Kovacevich the former CEO of Wells Fargo. If you who follow Buffett this is a bank that Berkshire Hathaway invests in and indeed recently increased its investment.
The actual presentation is a little on the dry side - but the fact that there are no clowns or snappy one-liners does not stop it from being interesting. If your attention flags a little keep with it.
I was particularly interested in his take on M&A. It is pure value investing. M&A is by an large a great destroyer of shareholder value. Dick's take is that you have to buy at a good price, something only makes strategic sense if it contributes revenue and it should be able to contribute revenue at the rate that the rest of the bank does once it is integrated. He, generally allows three years for a new acquisition to get up to speed. Another interesting point is that he is not interested in acquiring a business simply for cost savings - cost savings are a one-off boost, what he is looking for is continuing revenue.
"You should never make an acquisition unless the revenue growth of the combined entity is not greater than the revenue growth of the parts."
"A good business model that is hard to do gives you a superior competitive advantage."
"Almost all businesses are cyclical"
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