What’s the best way to reduce the risk of M&A failure?

Do a stock deal. Oh, and do the deal in an even year.

A new KPMG study of M&A performance, finds that deals financed with cash declined on average 12.7 percent after one year and 9.2 percent after two years. However, stock deals that took place during the same year (2007) declined an average of 5.1 percent after one year and increased 1.3 percent after two years.

The study analyzed 311 global deals announced between January 1, 2007 and December 31, 2008. Performance success – as defined by stock price change – was evaluated for one and two years after each deal’s announcement. more

“Cloud computing is happening in a big way,” confirms Michael Hugos, author of “Business in the Cloud: What Every Business Needs to Know about Cloud Computing” (Wiley, 2010). The widespread adoption of cloud solutions follows four years of increasingly intense tire-kicking by organizations, many of which still harbor concerns about data security.

These concerns are legitimate, and should be addressed in governance, risk management and compliance (GRC) programs, notes Ben Tomhave, principal consultant of LockPath, a software and services firm. Tomhave chatted about the growing need for companies to unite their GRC and cloud capabilities.

Eric Krell: Why is GRC a crucial component of a company’s cloud security strategy?

Ben Tomhave: Moving data and applications to the cloud means losing direct control over those resources. No longer can you call IT and demand that better security practices be adopted. Instead, better security practices must be planned for in advance and then incorporated into contracts and service-level agreements. It’s essential that your GRC program be mature enough to assess these agreements and situations, properly setting the bar for risk tolerance and risk capacity, and then ensuring through continuous monitoring and compliance practices that these benchmarks are being met. more

Monday afternoon around 4 p.m. EDT marked one of those rare times in the past several months when it was a pleasure to troll the late-afternoon online business stories.

Two U.S. economists won the Nobel Prize in economic science. Hedge funds suffered their worst quarter in a long time (sorry, it’s the Occupy Wall Street-er in me). And the Dow notched its largest daily gain in a month or so (sorry again: if I could magically de-link the market’s performance from happiness and daily decision-making – an illogical correlation that causes far too much unhappiness and stifles healthy risk-taking – I would do so in a New York minute). more

While researching 2012 compensation (executive and general workforce comp) developments for a research project, I came across one of those trends that felt refreshingly optimistic.

“Simple is better,” Axiom Consulting Partners’ Juan Pablo González replied when I asked him what compensation-plan-design dynamics he expected to see more of in 2012 in beyond. “More organizations are designing with flexibility, and the best solutions are becoming simpler.”

This indeed qualifies as a departure from the mind-bogglingly complex compensation plans HR executives, finance folks and some external compensation engineers – er, I mean consultants – devised in the past several years. The problem with these extremely detailed plans was that they often became disconnected from strategy – or, worse, they were too complex to change when key elements of corporate strategy suddenly shifted. more

In my previous entry, I referred to findings from BDO USA’ recent survey of public company boards. This week, I chatted with Wendy Hambleton, a partner in BOD USA’s corporate governance practice, to hear what she makes of the same survey findings and how she sees risk management being treated in the board room right now.

Eric Krell: What is the chief focus of public company boards today?

Wendy Hambleton: According to our recently completed survey of public company boards, risk is currently the number-one focus. Fifty-five percent of board members say they want to spend more time on risk management, more than any other area. When you consider the numerous potential threats to the global and domestic economy, and the general uncertainty that has taken hold of the country since the 2008 financial crisis, it is completely understandable why boards are intent on leaving no stone unturned when ferreting out risks in their organizations. Since a strong majority (61 percent) of directors believe their liability has increased in recent years due to additional responsibilities they’ve been given, some of this due diligence may be the result of a self-preservation instinct. more