The reporters at the Daily Telegraph, have an interesting story about the latest potential development of GM's neglected Swedish brand, Saab. Despite proclamations of Saab's pending doom, and the inability to find a proper suitor to acquire the brand, it looks like there is a slight chance of salvation via F1 racing guru and bizarre billionaire eccentric, Bernie Ecclestone, and a Luxembourg based private equity concern. As a taxpayer with a forced equity interest in GM, the werewolf hopes our government is able to salvage some sort of value from this neglected GM division, as GM is already getting hosed with write-offs by shuttering Saturn and Pontiac, not to mention the disgrace status of its brand equity. (That's a whole other can-of-worms, the long term viability of the GM's brand and business)
This leads the werewolf to wonder, given the doom and gloom shrouding the Saab brand, along with GM and Washington's complete incompetence managing the enterprise, how does a prospective buyer attach an optimal value to Saab? The clock is ticking before Saab goes bye-bye. As the werewolf types, it's being unwound and dismembered by financial advisors and management consultants. Therefore, the werewolf would think that the value erodes with each passing day. As a perspective buyer, would I get a better deal buying Saab's assets post-liquidation, for pennies on the dollar, including the naming rights, and starting the whole endeavor over from scratch, as opposed to acquiring all of the liabilities and baggage currently associated with the brand? There are dozen of financial and strategic concerns at play, both for GM and any potential suitor, yet, the perception that nails are be driven into the coffin, I would think strengthen any potential buyer to drive down the price, extremely weakening GM's hand, and giving suitors all of the leverage. The only play for GM is to try and get suitors into a bidding war with each, however, that seems highly unlikely at this point.
The fate of Saab was likely sealed years ago when GM shamelessly assimilated it into the heinously conformist and bland Detroit collective. However, there may be some interesting lessons on corporate valuation and both seller and purchaser behavior during Saab's death throws. The werewolf will be watching.
Addition: The werewolf would like to clarify some details around valuing an enterprise as it relates to this post. Traditional metrics include, comparables (the whole auto industry is getting squeezed at the moment, and Saab was a niche player, so that's not really helpful), projected earnings or discounted cash flow (normally several models could estimate these, but when you announce your exiting existence, this goes to zero), assets (Saab has these still, but the inventory isn't moving, and who wants a bunch of pampered unionized Nordic workers?), Market value (GM is such a charlie foxtrot, that this method is murky and imprecise), plus there are the softer value points like technology, pipeline, etc. These can probably be factored and are likely the basis for the pending pricing, but again, as a potential suitor, the werewolf would think all the cards are in your hands. This goes to a secondary take-away from the werewolf's business school Corporate Valuation class (also known as Corpse Val), the bankers and advisory folks love to push corporate valuation as a science, but when you drill down to realities, such as the one Saab and GM are facing, corporation valuation begins to look less like a science and more like an art.
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