The current issue of Business Week has a story on the rise of sovereign funds (funds controlled by a foreign government) as a significant factor in the global investing market. These funds have taken control of many businesses over the last few years.
The concern with them is their lack of transparency (among other things), but their cited virtue is that they invest for the long haul. We think this is good news.
There has been entirely too much short-term investing over the last couple decades by funds and investors of all sorts. Typically they will squeeze operational efficiency and cash out of existing operations and assets (usually a good thing, but not always), flip the business, and move on. A lot of money is made this way, but does this really best serve the cause of creating long-term value?
Sometimes. Sometimes not.
Our focus with Value Acceleration is on both the long term and the short term, and results can be generated with VA methods in both camps. But our heart is really in the long-term, and we are most pleased when we can help create a long-term, sustainable value proposition with a client. Short-term bumps in profit, sales or cash are great, of course. But the long term is where we—and our children—all ultimately live.