CorporateMOM decodes M&A Ego-System
I present here: CorporateMOM decodes M&A Ego-System. Corporate uses the word ecosystem so liberally. They should. The Ecosystem refers to Nature, whereas Ego-System refers to the individuals, and how they run their companies.
In this context, I have chosen $48.1 trillion pension funds assets to set target returns and align the Corporate Ego-System of Investee companies with the Ecosystem, so as to bring sustainability of profits and growths for the funds. In the 2023 study by OECD, Pension Funds stand at $48.1 Trillion as of the end of 2022 which is 15.6% less than the 2021 figures.
What the major funds have to necessarily focus is on the investee companies at the lowest rung of the fund users. I have as an illustration taken up M&A Ego-System. Assuming $ 48.1 Trillion Funds are used by 100k investee companies the top Funding Agency has to measure, the 100k fund users. The Ego-System of every company within 100k has to be measured and brought under SOS [Subject-Object-Self] Governance monitor.
The reason is simple, Invest and make sure you get returns. Although it is the dictum for corporate as a whole, Pension Funds, Sovereign Funds, or PF Funds have a greater responsibility toward making sure the investee companies have the governance standards set and followed. The reality check is abysmal. For example, the Life Insurance Corporation of India (LIC) has 273 listed stocks in its portfolio worth INR 10tn ($133bn). LIC takes a Board position in several companies as they did with IL&FS. The reality check is indeed abysmal. So the Corporate Ego-System prevailing today is abysmal. Pension Funds must check their own premises. To quote from the 2020 OECD Report:
Q: Pension funds invested mainly in equities and bonds
Pension funds were mostly invested in equities and bonds at the end of 2019. Pension funds held more than 75% of their portfolios in equities and bonds in 16 out of 36 reporting OECD countries and in 17 out of 28 other reporting jurisdictions. Pension funds invested in these instruments directly or indirectly through collective investment schemes (CIS). UQ
I am comparing the Corporate Ego-System today similar to what it was in 1616 when Galileo was imprisoned for correcting the Ego-System prevalent during that time that was pretty topsy-turvy. However, Galileo resolved the subject of the then Ego-System by means of science. Changing the mindsets of people needs scientific evidence.
CorporateMOM approaches the subject in the same manner. Aligning the Corporate Ego-System with the Ecosystem needs scientific reasoning when we argue and derive conclusions from observed data. What is lacking from the investee companies is the critical FEC [Fiscal-Ethical-Co-Responsibility] Report that CorporateMOM recommends. CorporateMOM is what Galileo would have been proud of – the science of Law of Physics, Quantum Physics, and Metaphysics are applied to Corporate Management.
Investee companies of their own are not going to adhere to value systems AFTER the funding is done. So CorporateMOM establishes a MeRIT System where it helps investee companies to create a standard Strategy Plan and by MeRIT – Measure, Record, Implement and Track the operations on a daily basis by converting CAGR to CDGR. The Creative Process of the Strategy Plan is crucial for Action Process. The six stages of Transformation by Investee companies from a Dream state to creating a Substance of Quality called an IPR or Policy Documents or Strategy Plan help investee companies to approach VCs with a robust Plan of Action. Once approved and the funds are made available Investee companies can activate the Action Plan instantly. As described in CAGR to CDGR, CARR to CDRR [Reduction Rate] a daily growth of investee companies would facilitate the investors to track the progress.
Looking at OECD stats I find the collection of data mentioned in their 2023 report as preliminary. What CorporateMOM suggests for investee companies to establish CDGR and CDRR would trigger stats on the go. Meaning governance is dynamic and OECD should look into developing stats on a daily basis.
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