So what happened here?

And was it ever really expected that this deal would go through?

Here are the facts:

It’s unquestionable that the Deutsche Böerse has a greater degree and percentage of liquidity than the NYSE. It was apparent to me back in 2009 that the relative strength of the Deutsche Böerse would see it as a preferred place to exit or capitalize in the coming decade. I was impressed with their system and their underwriting process. Wall St, naturally enough, was virtually oblivious to this.

“You mean Germany has its own stock market?” was the response I received from a noted private equity fund manager. As we all know, it’s hard for New York to consider that something real can exist outside of Manhattan.

There is a deep-rooted psychological aversion to actually admitting that the Deutsche Böerse take-over was just that – a take-over. The media, particularly inside the US, has continued to refer to it as a merger. However, it was unequivocally a take-over bid. As much as it really didn’t register in the US as a nationalistic issue – perhaps because it was just too uncomfortable to admit – it doesn’t mean that the markings of this next step towards globalization were not felt.

Fundamentally, the key attraction is that Börese employs a unique systemized approach, not only to underwriting, but also to regulatory statutes and, importantly, investment. The automation they use is central to why the Deutsche Böerse has become a model for numerous exchanges around the world, including the NYSE.

However, here’s a weightier issue:

It’s arguable that European anti-trust regulators were never, ever going to approve this deal, no matter how strong, sweet or good it was for global capital markets. In fact, it’s not just arguable, it’s highly likely. And, I have it from very good sources that both sides went into this fully knowing that was the case.

So what motivated this? Was it merely a public relations push?

Well, it’s deeper than just public relations. We must accept that, whether now, or a year from now, or twenty years from now, consolidation of the exchanges will occur. It’s inevitable. And 2010 and 2011 saw a slew of international exchanges attempting to consolidate based largely on the desire to open up more access to potential capital markets and, thus, encourage easier trading. Of course, few – if any notable – actually went through.

There’s potential this was all a dog and pony show – but one where the players were indicating to the other players how, who and where they would bet their chips. Undoubtedly, it has given the Deutsche Böerse an unprecedented amount of media and raised its profile massively in the USA. This is very important to the Deutsche Börse and it will allow Europe’s largest exchange – and, indeed, the world’s most profitable one – to attract more serious companies and investors. I think that’s a great pay-off for everyone. Furthermore, it will encourage investors Stateside to be more open-minded with investments, backed by the understanding that there is real and substantial liquidity and stability overseas.

All in all, this is a taste of what’s to come. It may not happen tomorrow, but the markings are now laid for wise investors and astute company owners to be more selective with how they plan their exit strategies.

The truth is that the Australian economy is, perhaps, remarkably strong. And the reason I say “perhaps” is because it appears that everyone believes this. Everyone, that is, except the average Australian you speak to on the street.

Not that you should believe them.

Unfortunately, Australia has bought the media-spun, Chicken Little lie that the sky is falling. And while this may be partially true in some parts of the world – think Greece – this could not be further from the truth in Australia.

And it’s the first industry to suffer when consumers tighten their wallets that is suffering. In 2011, Australia’s retail sector took a well-documented hit, with a number of home grown mega-retailers closing their doors despite Australians having plenty of jobs and plenty more money than other Western nations. Fanned by a strong Australian dollar and the accompanied increases in online spending to ship goods from the USA and Europe at rates cheaper than the local shopping mall, one could suggest it’s a triumph of free market ebb and flow. But is it?

Despite all of this, Australia has been rightfully highlighted as a model of intelligent positioning and fiscal responsibility in the Western world and is certainly positioned well to keep growing nicely for decades to come, yet all the while the Australian people, succored by their media, have bought the party line that they, too, are suffering through instability spawned by the GFC.

More than the few dollars saved to ship a iMac from the USA, the damaging decline in their retail sector – again, despite any real economic hardship – can be accounted for by consumer confidence. Or the “Emperor’s New Clothes”.

So this begs the real question that has a crucial lesson for all investors and business owners, alike:

Can the psychological state of the consumer impact the economy more than the necessities that form the basis of economic growth?

At a quick glance, the answer appears to be both yes and no. But, at a closer look, I’d suggest it’s “no”.

Let me explain this:

The average Australian and Australia as a nation is experiencing a prolonged period of prosperity not seen on record. This is all due largely to the resources boom of the past decade.

The country is growing steadily by serving, essentially, as a parasite to the booming Chinese economy.

At the same time, Australia’s residential property market has barely experienced as much as a blip since Countrywide exposed Freddie and Fannie in the US. Property values in most major markets are increasing nicely… still.

The unemployment rate experienced an “uptick” of 0.1% in November 2011, to hit a whopping 5.3%. Say it isn’t so!

Translated to American terms, that equates to nearly a full half of the current unemployed in jobs. Yes, a full half! If half of America’s currently unemployed were capably employed in their field would that make a difference to consumer sentiment in the USA? Just a little bit?

Australians enjoy a renowned quality of life and this is somewhat helped by a massive minimum wage of $15.51 (approx. $US14.00). The country is growing, the population is working and cashed up, their houses have held and, largely, increased in value, the Australian stock market is ticking – but retail is getting blown out of the water?

I mean no mockery of those in the retail sector who have lost their shirts, but this failure in the Australian economy is occurring in spite of the factual data that largely suggests it shouldn’t. It is clearly an aberration.

Much of this is the Australian media’s fault. However, it’s the individual’s responsibility not to get brainwashed, though.

At the core of my business philosophy is the idea that money will transact towards value, almost without any effort.

This powerful driver is next to impossible to stop. It is for this reason that the world economy will press forward, even if it stumbles, until it is ever fully prevented from doing so. Short of a global nuclear crisis, there is no reason to believe this will ever be the case, not even if the American dollar crashes and the entire European Union becomes insolvent. Someone will still need stuff from someone else, requiring that person to somehow generate that stuff!

So here’s the lesson:

Contrary to lagging consumer sentiment, the undying, fear-inducing media attack on business confidence in much of the Western world, the economic activity of a continent, a nation, a people or a small business will not be determined by psychological state of the consumer. Australia’s economy proves this, right now. Instead, it will be determined by effectively communicating the superior ability to transact in value.

One must identify the value proposition:

Where is the core value being transacted? Where is the substantial value? Is this country, product or service actually valuable?

The money didn’t go anywhere. The big green, one-eyed monster didn’t steal it. Scrooge McDuck isn’t swimming in it. It just followed value.

Money will always transact in the direction of value. You’d better have substantive, documented and real value to transact – and you’d better know how to most efficiently and effectively communicate the value in the coming years, whether to customers, vendors, your employees, your investors, or potential acquirers. Or you could face the same fate as Australia’s retail sector – and just like it, despite all the facts that suggest you shouldn’t.

It used to be that the ever-growing western economy covered the flaws of a business – and this was superficially true. Most business success in the past 60 years has occurred because of conditions outside the boardroom – like, say, the incredible economic growth consistent since World War 2 – and not because of the talent, products or location. It was osmosis.

Don’t pat yourself on the back. Your business has succeeded in spite of you and your personnel. It is unquestionable. Once you accept this, you can begin to see the road to improvement.

Now consider this:

There is no bad or incorrect way you could tell me that my wife has just given birth to twins. I would want to “buy” your “pitch” no matter how it was packaged.

Likewise, there is effectively no bad way you could sell an iPhone. It is a remarkable, useful and enjoyable piece of technology that has taken off precisely because it is a good, valuable product.

Similarly, there is no way to screw up the transition of a business that is properly prepared, at a fundamental level, for succession and exit of the owner.

If the business is intimately aware of its market, end user, its patrons, products, clientele and its core reason-for-being, then it will stick out from an ocean of other businesses that have succeeded, despite having no real knowledge of any of these, let alone the ability to communicate them and pass them on. I see so many deals that attempt to hide, re-arrange, obstruct and lie about their faults, instead of focusing on effectively and cleanly building a workable, real deal that expresses an understanding of where the substantial value is being transacted. It’s no wonder the global financial crisis impacted so many so negatively!

Structuring your company cleanly is, therefore, the single most important pillar for determining, measuring and organizing the improvement of business valuation.