Due negligence

Tag-Heuer-Westfield (1)Last Friday I wrote an article entitled The Retail Traitors and I received both negative and positive comments. The gist of the article concerned the sale of Westfield to Unibail-Rodamco. One commentator suggested that Rodamco had not been sold a pup as I had implied, the reason being that they would have done extensive due diligence before parting with $US24.7 billion. Fair comment you say?

Several years ago I had the misfortune to work for Arthur Andersen before it imploded and I was involved in various due diligence investigations, by providing a retail perspective. What I learned was that due diligence should really be termed due negligence!

These exercises deal with numbers.

The bean counters (aka accountants) have a field day analysing and hypothesising and extrapolating until their laptops go into meltdown. Their report, together with a hefty invoice, is then presented and is sacrosanct because it is signed off by one of the big firms.

Invariably their advice includes a valuation and then the negotiations commence.

But it is not all about due diligence (or negligence).

What I am alluding to is vision and timing.

This is what I say Frank Lowy has, which many others don’t.

You cannot write vision into a document.

I have worked with or for a number of self-made entrepreneurs and the successful ones all have a degree of Frank Lowy’s “dog sense”. This is the innate ability to take a course of action keeping half an eye on what the advisers are saying and then sometimes doing the exact opposite.

If this were not to happen, bean counters would be running the world and everything would be grey and predictable. There would be no Frank Lowys or Richard Bransons or Bill Gates. There would be a tribe of little grey men in their little grey suits going off every day to their little grey offices using big grey trains to get there.

Stuart Bennie is a retail consultant at Impact Retailing www.impactretailing.com.au and can be contacted at stuart@impactretailing.com.au or 04


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