{"id":561111,"date":"2012-06-27T07:42:20","date_gmt":"2012-06-27T11:42:20","guid":{"rendered":"https:\/\/vrbbd.wpengine.com\/vrbbmadison\/small-company-growth-trends\/"},"modified":"2022-01-31T12:44:13","modified_gmt":"2022-01-31T17:44:13","slug":"small-company-growth-trends","status":"publish","type":"post","link":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/small-company-growth-trends\/","title":{"rendered":"Small Company Growth Trends"},"content":{"rendered":"
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The median sales of a company going public has gone from an average $15 million in 1999 and 2000 to $164 million in 2004.\u00a0 Smaller companies have decided not to go public as often as in years past, and they reap the quick \u2013 and cheap \u2013 money as a result of that decision.\u00a0 The question is “why?”<\/p>\n

A company with only $15 million in annual revenues would most likely not want to have an IPO and absorb all of the attendant costs and the on-going fees related to going public.\u00a0 They also would not want to have to spend the money necessary to comply with the Sarbanes-Oxley regulations.\u00a0 Smaller companies have to pay a hefty price to go public \u2013 and remain public.\u00a0 In fact, a recent Business Week article reported that \u201cBankers expect a record number of U.S. companies to go private this year, topping last year\u2019s 86.\u201d<\/p>\n

Many CEOs, in order to rapidly grow their businesses, merge or acquire other companies.\u00a0 However, many of these do not work out and the acquired entities eventually get sold off.\u00a0 But as long as mergers and acquisitions are in vogue, large companies will acquire smaller ones in an effort to grow as rapidly as possible.\u00a0 Therefore, many smaller companies that won\u2019t go public because of the costs and subsequent compliance issues will be absorbed by larger companies.<\/p>\n

The trend today, at least in manufacturing, is to provide complementary services.\u00a0 For example, General Electric manufactures aircraft engines and medical equipment, but they also provide financing and maintenance services for the things that they manufacture.\u00a0 These ancillary, but complementary, services are big profit makers.\u00a0 Small service companies that provide these services may be excellent acquisition targets for manufacturers.\u00a0 If smaller companies want to grow, adding complementary services such as GE does may be the best way.<\/p>\n

On the flip side, many large companies are divesting themselves of companies that don\u2019t fit into their core strategy.\u00a0 For example, McDonald\u2019s purchased Boston Market and several other food franchises in an effort to continue their growth. McDonald\u2019s discovered that they were much better off focusing on their core business than they were trying to grow new concepts.\u00a0 It is believed that these other franchises will be sold or they may already have been.\u00a0 Smaller companies may want to divest themselves of products or services that aren\u2019t complementary to their core business.<\/p>\n

Some companies have almost reinvented themselves by adding new, more profitable, and \u201csexier\u201d services or products.\u00a0 This can increase the value of the company.\u00a0 Smaller companies, because of their size and the fact that they usually have one manager, can shift quickly.\u00a0 They can get rid of products or services that don\u2019t generate commensurate profits, or add new products or services that can add to profits, much more quickly and efficiently than their larger counterparts.<\/p>\n

Small companies, at least for the short term, will not be likely to go public, will be able to shift gears quickly to improve profits, but may also become acquisition targets by larger companies.<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

The median sales of a company going public has gone from an average $15 million in 1999 and 2000 to $164 million in 2004.\u00a0 Smaller companies have decided not to go public as often as in years past, and they reap the quick \u2013 and cheap \u2013 money as a result of that decision.\u00a0 The […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[9],"tags":[],"class_list":["post-561111","post","type-post","status-publish","format-standard","hentry","category-general-business-brokerage"],"blocksy_meta":[],"_links":{"self":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/561111","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/comments?post=561111"}],"version-history":[{"count":0,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/posts\/561111\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/media?parent=561111"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/categories?post=561111"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.vrbusinessbrokers.com\/vrbbmadison\/wp-json\/wp\/v2\/tags?post=561111"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}