Can employees gang up to save Satyam?
Imagine a situation where 50,000 employees of Satyam Computer Services form a group on social networking site Facebook or Orkut, with a title like: Satyam employees out to save the company. N Madhavan explores.business Updated: Jan 08, 2009 17:13 IST
Imagine a situation where 50,000 employees of Satyam Computer Services form a group on social networking site Facebook or Orkut, with a title like: Satyam employees out to save the company.
Imagine them using an online poll to elect a senior one among them to lead the campaign, with a panel of others.
Now, imagine them calling a venture capitalist or private equity firm and offering a buyout.
Sounds strange, unbelievable, but sometimes, I think the Internet and knowledge workers can make things happen. I hear things that the Hyderabad company disgraced by Chairman Ramalinga Raju’s fraud may even have understated its number of employees, but is clear that the numbers run into tens of thousands.
The company was just two days ago valued at more than $2 billion but now faces the prospect of its net worth being eroded. The market value was down to a fifth of what it was at the start of the week. But I do think that the sheer presence of skilled software engineers on such a large scale, with existing customer relationships, can make them all look like a healthy startup – even if the current account-book was drained out.
That is the magic of a knowledge company. The assets are the people.
In the US, MBO –management buyout – is a common concept where sitting managers use some cash from outside to acquire the company they know how to run. In the case of Satyam, much of the existing top management – even those who have not quit and are standing by—is discredited.
But institutional investors and customers will not be averse to an MBO-style buyout in which bona-fide employees ask institutional investors.
The move would need entrepreneurial daring from a group of inspired employees, and a committed private equity firm. They can together invite an outside company with sound, credible CEO-level people to be a shell that can acquire the employees, the relationships and the brand of Satyam, even if the liabilities are such that the current book bleeds away.
It sounds like fiction, but I do remember that a company called Kamani Engineering was in the 1990s for an attempt by workers to take it over. Of course, they were unionized workers in a blue-collar-style economy rooted in the past.
In contrast, things can be dramatically positive in a tech-savvy company.
It is my belief that employees can even collectively raise a loan to buy out the company. In the age of Internet and software, a lot can be done.
Imagine, in the Silicon Valley, some companies get high valuations from VCs for the sheer idea and the team involved.
As many as 50,000 employees in collective action can certainly make a difference.
It might be a dream, but I do not see it as an impossible one.