Single A4 Sheet Analysis

"Gibbs lived by a rule that if he couldn’t demonstrate the deal was successful on an A4 sheet of paper, it wasn’t any good."

"Parallel to Cameron’s valuation effort, Gibbs did his usual single piece of A4 paper analysis of how much Telecom might be worth: ‘It wasn’t hard for Telecom,’ he says. ‘It was a lovely, fat company, with huge margins and a lazy balance sheet. It was obvious that if you could keep the margins it would be a fantastic business.’ He told the Americans that they wouldn’t get it for less than a price-to-earnings ratio of 12, which with earnings a little over $300 million, put the price around $4 billion. It was a long, steady process to reveal to them the value in the business."

"Then Gibbs pulled out an A4 sheet of paper outlining what should be done, which, in essence, was a second round of restructuring to halve the staff numbers again and blow Clear away by being leaner and meaner."

"Gibbs advised the board to announce to shareholders that they did not recommend the Brierleys bid and that the company would make a major announcement very soon concerning the value of the business. That stopped the bid in its tracks. Within a few days, after regearing the balance sheet, Gibbs had LWR announce a substantial return of capital to shareholders and a massive increase in dividends. The share price immediately jumped well above the Brierleys bid. It was fast and easy money for Gibbs, exactly how he preferred it — nothing that couldn’t be worked out on one side of an A4 sheet of paper. Though they weren’t thinking about it in those terms, Gibbs and his contemporaries were jolting tired and inefficient companies into the modern world."