Tuesday, November 27, 2012

Analytical Spectral Devices (ASD)sale to Spectris - a strategic buyer - is announced

Congratulations to Analytical Spectral Devices on its sale to Spectris - a strategic buyer 

Date: November 26, 2012
Location: Almelo, The Netherlands
Spectris plc (“Spectris” or the “Company”) (LSE: SXS), the productivity-enhancing instrumentation and controls company, today announced that it has signed an agreement to acquire ANALYTICAL SPECTRAL DEVICES Inc. (“ASD”), a leading manufacturer of Near-Infrared (NIR) instrumentation solutions and applications expertise for materials measurement and research, for a debt and cash-free net consideration of $14 million (approximately £8.8 million). The consideration will be met from existing cash and bank facilities and is subject to routine balance sheet adjustments. Spectris expects the acquisition to complete before the end of the year upon ASD shareholders’ approval.
In addition, a contingent consideration of up to $19 million (£11.9 million) may become payable to the sellers, based on achieving growth in sales targets for the 36-month period ending 31 December 2015.
The acquisition of ASD is in line with Spectris’ established strategy of growing and strengthening its businesses via acquisition of complementary businesses. ASD will become part of the Materials Analysis segment and will be integrated with PANalytical.
Jim Webster, Spectris’ Business Group Director, commented: “ASD’s successful NIR solutions for the Remote Sensing, Mining and other Industrial markets complement and extend PANalytical’s offering towards scientific and industrial customers and will add a new contiguous product line with portable, handheld, benchtop and online products. Furthermore, the acquisition of ASD will provide strong synergies in the combination of both companies’ technologies, customer support capabilities and distribution channels.”
ASD, based in Boulder, CO (USA), employs around 50 people. PANalytical is the world's leading supplier of instrumentation and services for X-ray diffraction (XRD) and X-ray fluorescence (XRF) spectrometry, with more than half a century of experience. The company offers analytical equipment for industrial and scientific applications as well as for the semiconductor market.

Monday, November 26, 2012

Albeo Technologies announces sale to GE Lighting - a strategic buyer

Congratulations to Jeff Bisberg and the team at Albeo Technologies - a 2010 Colorado Company to Watch.

Today, November 26, 2012,  Albeo  announced their sale to GE Lighting - a strategic buyer.

GE Lighting Acquiring Colorado-Based Fixture Company Albeo Technologies

EAST CLEVELAND, Ohio — November 26, 2012  — (NYSE:GE) — GE Lighting—inventor of many of the major lighting technologies at work today, including the first visible LED 50 years ago—has signed an agreement to acquire Boulder, Colorado-based Albeo Technologies Inc., a privately held LED fixture manufacturer established in 2004.

“The addition of Albeo Technologies’ immensely talented team and its award-winning LED fixture portfolio enhances GE Lighting’s ability to serve as a trusted advisor to enterprise customers around the world,” says Maryrose Sylvester, president and CEO, GE Lighting. “This acquisition is a big boost for GE customers moving aggressively toward an all-LED building envelope in new construction and retrofits, including retail, commercial and industrial high-bay applications.”

GE’s professional solutions business today offers commercial, industrial and municipal customers a range of legacy lighting solutions and LED systems for architectural, indoor, outdoor, signage, retail and transportation applications.

Albeo Technologies’ LED systems—high-bay, low-bay, linear, surface mount and under cabinet fixtures—are at work in commercial, warehouse, industrial, cold storage, office, data center, food processing, parking garage, school, sporting and correctional settings. Its solutions have helped to illuminate a range of “all-LED” facilities, including one of the world’s 10 largest data centers. Albeo Technologies’ products have been recognized with 16 independently judged awards, including six from the U.S. Department of Energy.

Friday, November 16, 2012

Why demographics may drive business owners to sell - Re-evaluating your transition and exit

[Editor's comment: Many business owners and CEOs have been pointing to the presidential election for some signs of positive change in the business and economic environment. It has occurred to me that perhaps these hopes may have been unfounded - regardless of the election outcome.  - DPM]

Have the markets for transitioning your business fundamentally changed? In the early 2000's there was a robust market for selling businesses.  The economy was strong, the market was flush with private equity, and the opportunities to grow businesses seemed endless. Then came the great recession of 2008 - 201_.  Has this recession been a blip? Will we be soon returning to robust economic times over the next few years? Many were very hopeful during the recent presidential election cycle. Regardless of your political leaning, there may be forces at work that neither candidate could overcome.

Demographics have a profound impact on business cycles. Twenty years ago, I attended a conference with the keynote address given by noted demographer, Harry Dent, who forecast several major economic cycles over the past several decades including the early 1980's and the current recession starting in late 2007. Dent's basic premise is that business cycles and opportunities are driven by demographic-based economics. Since 70% of the economy depends on consumer spending, he reasons, tracking consumer spending volume is a key driver. Spending habits, life decisions, etc. are driven by significant demographic changes. If you follow the bulge of baby boomers through the lifecycle, the last of the baby boomers reached age 47 in 2012 - a time in life that starts a decline in overall family spending.

See the graph below which shows peak U.S. family spending. While it shows a slight spike, coincidentally in the 2016 election year, Dent shows that the next decade will decline, bottoming in 2023.

Spending Wave Chart

Demographic spending patterns may indicate 10 more years of decline. Whether or not you believe Harry Dent's many other conclusions, it is interesting to note that in recent years economists have become focused on economic trends caused by demographic extremes. Declining birth rates and aging populations in Europe and Japan foretell long-term economic decline. Issues with a dramatic imbalance of males and females in China due to the 1-child rule (mostly male) are causing predictions of a serious aging population within the next 20-30 years, etc.  The truth is, politics and policy aside, that the next decade could continue to be one of decline in the U.S. until the spending impact of the echo baby boomer generation (2023 -2050) takes effect.

Baby Boomer Business Transition Bubble. If you are a business owner demographics also play another role. If you are a regular reader of the Dave Mead blog and this article series, you have read about the  Baby Boomer Business Transition Bubble. The number of baby-boomers who own businesses who are at (or approaching) retirement age who need to sell to provide liquidity for retirement is at an all-time high. Consider this - in 2001 the number of business owners with businesses between 5 and 500 employees that needed to sell was 50,000. That number reached 350,000 by 2006 and 750,000 by 2008-10. There were relatively few sales in 2008-2012. Today, with that four year pent up supply of sellers, the number is estimated to be between 1.2 to 1.5 million.

What does all that mean to you, as a business owner? If you have many work years ahead of you, your business is performing well, is in an industry with strong growth independent of the economy (e.g., healthcare), and revenue and profits have been growing despite the downturn, you might continue to focus on strategies that will help you continue to grow and expand. Investment bankers, however, report that companies in this situation are commanding valuation multiples at near-record levels and are in high demand. So you could take some chips of the table.

If there is limited growth in your industry, if your industry and company is dependent on robust overall economic growth, perhaps now is the time to prepare to exit. In these situations, the value of your business may not be higher in 5-10 years - it may actually deteriorate. If a business owner is in his/her fifties or sixties and the business has stabilized with good EBITDA over the past 12 months, consider preparing to exit as soon as your company can be prepared. As we have outlined in other articles, it may take 12 -30 months to prepare and execute a successful sales transaction. Properly prepared companies have historically sold faster and at higher valuations.

Knowing when to harvest your business may be your most important decision. If you would like to have a no-obligation conversation about building value in your business and evaluating the optimal path and timetable for a successful transition and/ or exit, please contact us at Mead Consulting. Our senior consultants have been involved with helping dozens of business owners maximize value as well as having the experience of previously navigating their own businesses through successful exits. 

Tuesday, November 13, 2012

Colorado success stories: Quark - Schiavone’s strategy has Quark “revolutionizing publishing again”

[Editor's note: This is another in the series of Colorado success stories - profiles of the companies of our clients and friends as told by the CEOs]

From the moment you meet Ray Schiavone, CEO of Quark, you see his energy, passion, and enthusiasm. He certainly has needed all that passion and determination over the past six years as he led the dramatic transformation of Quark into the digital age. Quark, founded in Denver in 1981 was the market leader in desktop publishing software for the print publishing industry – at one point dominating their market. Through a series of missteps, a lack of attention to innovation, some insensitivity to customers, and a failure to adapt to a rapidly disappearing print publishing industry, the company lost its luster in the early 2000’s and its market share tumbled. It was into this environment that Ray Schiavone entered when he joined Quark in 2006.

Mead: Why did you join Quark?
Schiavone: I was with General Electric for 14 years and worked my way up to the executive ranks. I was asked to run a start-up business for GE – a SaaS (Software as a Service) business for indirect purchasing. We grew the business rapidly and received an unsolicited offer to buy the company within the first 24 months. It was then that I caught the entrepreneurial ‘bug.” Next, I went to a VC-backed venture, Arbortext, where we more than doubled the revenue in 4 years. I joined Quark because I saw an opportunity to leverage Quark’s technology amid the shift to digital and other forms of print. It was a well-known brand with great technology but no clarity of vision or strategy of where to take it.

Mead: What was your initial focus?
Schiavone:  We needed to create a culture of innovation; the company needed to be re-invented. Many of the senior managers had been with the company for a number of years and thought that since Quark had previously owned the market that we should double-down with products in the print publishing industry. I knew that in order to be successful we needed to shift our strategy to digital.  As Wayne Gretzky said, we needed to skate to where the puck was going, not to where it had been. To accomplish this, I needed to be certain that everyone was on board with our strategy and direction.  It took some time to overcome resistance to change, eliminate the “not invented here” syndrome, and to get the team aligned. Quark had revolutionized print publishing with its desktop software. It became our mantra to revolutionize publishing again – in digital media.

Mead: What have been the biggest challenges?
Schiavone: Changing an entrenched culture to a culture of innovation and trying to find ways to invest during the most challenging economic downturn since the depression.  We spent 2007 promoting the new strategy and launched it in 2008. Then, in late 2008, the downturn hit and in 2009-10 we restructured and invested in the new direction (reallocated investment to our digital strategy). The transition was especially difficult, because, while we were investing in digital, the print side of the business was declining rapidly. The down market forced us to diversify our product line and client base and it probably accelerated the shift by five to ten years.

Mead: What is your strategy for differentiation?
Schiavone:  It is Quark’s intent to be the leader in digital publishing. We have created an end-to-end solution for enterprise publishing, meaning that we address the content lifecycle from creation to delivering the output to mobile phones and the iPad. What that means, in one example, is that an enterprise customer can integrate print and digital workflow and automatically push the print-ready content to the iPad, phone, and Web with the push of a single button. We partner with the technology providers that are at the heart of most enterprise infrastructure, such as Microsoft and IBM. We offer the tools that are helping designers to be a part of digital publishing.

Mead: Did the transition also involve some acquisitions?
Schiavone: In 2008, we acquired In.Vision, which had XML authoring software which helped Microsoft Word users create reusable XML content for our digital publishing solution. In 2011, Quark itself was acquired by Platinum Equity, which provided us the capital to grow. Then in May 2012, we bought Mobile IQ, creator of PressRun™, a cloud-based publishing solution for delivery and interactive experiences across tablet and mobile channels. Both of these acquisitions provided Quark with some of the new tools, technologies, and competencies necessary to execute on our strategy.

Mead: Describe Quark’s culture today.
Schiavone: It’s one of innovation. The team is empowered to take a chance, they can change things. We are open to taking risks. We’ve failed a few times, but we keep focused on innovating to solve customer problems.  This is driving our growth today. .
Mead: What are the challenges to current growth?
Schiavone: We feel like we’ve got the best solution in the market today.  Our challenge is to get the word out. 
Mead:  Ray, what lies ahead for Quark?
Schiavone: We’ve made great progress and have built a great team. We grew enterprise revenue 30% in the past year and we anticipate growing another 30% in 2013. We will continue to innovate in our markets, and expand functionality to become the comprehensive solution in financial services, government, and high tech manufacturing. It is our ongoing objective to help them continue to transform customer communications, develop new revenue streams, and reduce their costs by automating the delivery of customized, intelligent communications across print, the Web, and digital media.

Thursday, November 1, 2012

When did it become OK to just be OK?........OR.......... Have we just re-defined success to lower levels?

When did it become OK to just be OK?
          Have we just re-defined success to lower levels?
  • Flat is the new up
  • We’ve maintained our position
  • We’re up from last year” (but up is still well below 2008 )
  • We’re holding our own
  • We’re doing well…considering the economy”
Or do we just ignore problems and congratulate each other for mediocre performance. The predominant use of the word “awesome” to describe any activity is but one example.
Someone who can’t get even the basics right for an event is congratulated on an awesome job...Someone who barely maintains an organization’s or municipality’s status is saluted for an awesome term…Someone who avoids risk and therefore doesn’t make a mistake is saluted.

Is this the outcome of the “everyone gets a ribbon” generation? ….or “grade inflation?”…or just lowered expectations? Or just the impact of an economic beatdown?

Has the economic downturn made it OK to just be OK? Have we lost our MOJO?