AlacraBlog

Facebook for Business?

There's an ongoing discussion here at Alacra (and I'm sure elsewhere) about whether or not Facebook can become an important business tool, in some (or all) ways replacing and improving the value provided by LinkedIn.  Many of my A-List blogging pals - Pierre, Seth, Fred, Roger, Don and Barry are pretty enamored with Facebook from a social networking and venture capital perspective.  But I just don't get the hype, especially as a business tool - there are just too many distractions. The distractions are the kinds of things my 15 year old can be continuously amused by, but to me equate with watching TV (YouTube) in the office.   Jason has described this well in Facebook Bankruptcy.  Perhaps more to the point is Umair's post titled Is Facebook Friendster 2.0?  Certainly, it's nice to get invited as a friend and a highlight of today was hearing from Nate Richardson, who left Dow Jones a while back to become Country Director of the International Rescue Committee in Liberia.  So at this point Facebook is succeeding as entertainment (which can of course be very lucrative) but seems far off from serving a useful business purpose.

New Additions To The People Data Space

Two new products in the extremely crowded "People Data" space were recently announced.  LexisNexis launched ExecRelate and Leadership Directories launched Leadership Networks.  Barbara Quint of Information Today had a good write-up of the two products yesterday. Virtual tours are available for both.  The key differentiator for LexisNexis is their ability to provide news on people.

      “Executive and board member information is often outdated or unavailable on the Web, so we have invested the time to capture this proprietary content, keep it updated, and visually cross-link it for users to see connections,” said Roderick Morris, vice president of Business Information Solutions for LexisNexis U.S. Corporate Markets. “Our analysts are updating and verifying thousands of pieces of data each day and scanning news sources for personnel changes. Our breadth of coverage and features like our side-by-side comparison make this a truly unique and compelling tool for those developing and analyzing relationships with board members and senior executives. And with personnel change      alerting capabilities, ExecRelate offers a comprehensive solution.”

Leadership Networks offers some interesting visualization tools.  It seems both products have been designed for users who spend a great deal of time researching and analyzing relationships as they are "full-featured and appear to require at least some training before a user could extract all the built in value. 

 

New Investment Banking Compensation Plan

Lina Saigol in the FT creates a memo from investment banking management to its team, reflecting the changes in the credit markets.  The highlights:

As a result, Bulge-Bank is holding an enormous amount of debt on its own balance sheet which we are unable to syndicate for the time being.

Unfortunately this means that profits will be greatly reduced this year, and, as a result, we will be unable to meet your characteristically high expectations for year-end bonuses. Aside from top performers, we are predicting these will be flat on last year’s increase of 10 per cent — 15 per cent.

Employees in leveraged finance are likely to bear the brunt of these reductions.

I realise that this must be incredibly disappointing, particularly after such a frenetic period of activity.

But we are very keen to reward all your efforts this year and, consequently, the bonus committee has come up with a novel suggestion which may mitigate your disappointment.

Bulge-Bank would like to offer you the opportunity to buy a slice of the leveraged buy-out debt we are sitting on. Once the credit market returns to normal, we will help you sell down your portion — for a discounted fee — and hopefully you will make a profit.

We realise this is highly unconventional, but we hope you will see it as a unique investment opportunity and a chance to help the firm.

As is usual when markets become less favourable, we will adopt our standard practice of asking you to reduce expenses, including night-taxis and colour photocopying. Fresh fruit baskets will no longer be provided in client meetings, and we ask you to limit travel and entertainment for the time being.

Identity Resolution for Anti-Money Laundering

Financial institutions looking to comply with anti-money laundering (AML) and terrorist financing regulations face a multitude of challenges.  One of the biggest hurdles is the fact that the watchlists provided by regulatory agencies often have sparse information.  Let’s face it, terrorists and fraudsters generally don’t provide detailed biographical and personal details.

That leaves AML professionals to try to match customer information to watchlists using little more than a person’s name.  Compounding the challenge is the fact that cultural variations in spelling make matching more difficult.

Alacra has recently been working with a partner, Infoglide Software, on ways to improve matching accuracy while reducing false positives.  Alacra VP of Product Management Barry Graubart recently guest-wrote a post about the challenges of name matching in AML on the Identity Resolution Blog. 

Is Enterprise 2.0 for Real?

While Generation Y has been quick to adopt the so-called Web 2.0 applications (social networking, wikis, blogs and other forms of user-generated content), it's been slow to make its way to the enterprise.

Web 2.0 capabilities lend themselves to expert identification, collaboration and other knowledge management applications.  Yet their viral nature and social focus has kept corporate IT from embracing them to-date.

KPMG has just released the first of a three-part series entitled "Enterprise 2.0: Fad or Future?".  In this first installment, the authors discuss seven "Enterprise 2.0" technologies (blogs, wikis, tagging, mashups, RSS, social networking and prediction markets) and provide substantive examples of how they've been applied in the corporate space.

Of course, with a focus on Web 2.0, the report is available either as a traditional document or as a podcast.

Conflicting Views on M&A Activity

Yesterday's FT and Finfacts each had an article announcing KPMG's view that M&A activity is peaking.  KPMG uses their Global M&A Predictor to forecast M&A trends.

The forecast, based on a detailed analysis of KPMG Corporate Finance's Global M&A Predictor – a forward looking index of 1,000 leading companies' net debt to EBITDA ratios and Price Earnings ratios¹ – reveals that pressure on the accelerator pedal has come off, as regards international asset prices, with 12 month forward PE valuations (the valuation ratio of share price to estimated earnings per share) increasing only marginally.²

KPMG's research also highlights that significant cash and debt capacity remain³. However, a modest decline in deal appetite and confidence, rather than capacity or average deal value, is expected to prevail in the coming months.

KPMG Corporate Finance's Global 1,000 M&A Predictor suggests that the current M&A cycle is about to peak, and believes that Dealogic's latest data, which shows increasing average deal size on lower volumes, indicates a "final hurrah" with fewer, but larger deals, being done. Importantly, due to the relatively sound market fundamentals and generally strong corporate balance sheets, KPMG believes that, in contrast to the steep dot-com collapse of 2000, the slow-down will be gradual.

But Citigroup's Robert Buckland said in a Financial News article that he saw "no reason deal volumes in the second half of this year would not exceed the record level of the first half."  The FT's Alphaville goes on to quote Buckland as saying

The derating of equity and re-rating of corporate debt (through a combination of low government yields and falling credit spreads)has offered an historic opportunity to the global private equity industry. It is no surprise to us that the buyout industry was not a big player in the last M&A boom. Their trade (issue corporate debt to buy assets in the public equity markets) made no sense when the corporate bond yield was 500bp higher than the earnings yield — equities were too expensive relative to debt. But now that gap has closed and we areseeing one of the biggest arbitrage trades in financial market history — borrow off the debt markets to buy in the equity markets. Recent movements in asset valuations have done little to threaten the opportunity highlighted (in the graph above). Corporates who use cash or debt to buy other corporates are, in effect, putting on the same trade.

Given that many of our clients are bulge bracket and boutique investment banks, we have a handful of our own indicators of M&A activity and right now we're seeing a typical summer slow down.  But nothing indicates that deal volumes are set to contract.  Hopefully this isn't wishful thinking.

   

Alacra Customer Forum, London

Alacra held its first customer forum at Swithins Wine Bar in London last Wednesday night.  We had about twenty customers attend representing bulge bracket investment banks, major accounting firms, large commercial banks and insurance companies.  Our goal was to solicit feedback and discussion on two subjects:  1) Company mapping and reference data, where Alacra's Concordance Services are gaining traction and 2) Alacra Current Awareness and Alacra-On-Demand, which are meeting the needs of increasingly mobile financial institution and professional service firms employees.  We also presented the idea of a search appliance, which would handle both internal and external alerts for a client.  The most interesting discussion revolved around RSS aggregation and the market's craving for idea generation tools. The Alacra team thought the Forum was a big success and we're thinking about putting a similar event together in the fall in New York.

A Hipper Crowd of Shushers

In case you missed it, Alacra alum Jarid Lukin pointed me to this New York Times Fashion & Style article that highlights the new breed of New York librarians. 

Librarians? Aren’t they supposed to be bespectacled women with a love of classic books and a perpetual annoyance with talkative patrons — the ultimate humorless shushers?

Not any more. With so much of the job involving technology and with a focus now on finding and sharing information beyond just what is available in books, a new type of librarian is emerging — the kind that, according to the Web site Librarian Avengers, is “looking to put the ‘hep cat’ in cataloguing.”

Definitely worth a read.

All Work and No Play...

...well, we know what that did to "Jack" and wouldn't want that to happen to the team here at Alacra.

So, earlier this week, the Alacra team got together for a softball game.  A good time was had by all.

At left, Developer Karl Kaebnick demonstrates that his skill with a bat can match that with the mouse.

Meanwhile, Product Manager Anne Witkowski shows that she can handle a glove,

while Developer Barry Kupfer reinforced the old saying that "programmers dig the long ball".

Alacra Wiki adds Consultant, Recruiter Categories

We’ve just added two new categories to the Alacra Wiki.  The new sections provide profiles of leading consultants to the content industry and executive recruiters serving the content industry.

An ecosystem has developed around the content industry, of consultants with niche specialties.  Our Consultant page includes listings of sole practitioners as well as larger consultancies.

Similarly, while many large search firms have a practice in the publishing or media field, many of the senior searches performed in this industry are handled by boutique firms led by professionals with experience in the industry.  Many of these boutiques are profiled on the Recruiters page.

Are you listed on the Alacra Wiki?
The Alacra Wiki is a vertical wiki serving the business & financial content industry.  The wiki is organized into categories such as people, publishers, investors, blogs and more.  Today, there are hundreds of people, companies and databases included on the Wiki.

Anyone can update the wiki by registering at www.alacrawiki.com.  Once registered, for tips on how to add your information, take a look here.

If you’d prefer to have us add you or your company, just drop us a note at customer_service@alacra.com with the details and we'll do the work for you.