Note: This blog entry was authored by Graeme Plant, a dealmaker with Woodbridge Group who works with Ney.
It’s December of 2008 and times are tough, really tough. The Fed is dropping interest rates again, credit markets are badly damaged, and consumers are staying home. The news and conversations are so focused on this bad news that I believe some of it is becoming self-fulfilling. We have clients who are hanging every failure they see on the economy. Yeah, times are tough, but we still have to take responsibility for running our businesses as best we can in these lean times. I fear that some companies are letting the news put them in a defeatist frame of mind and not putting the same energy into pursuing business that they once were.
Not everyone is doing that. We had a call with one of our clients who had been a little hard to reach lately, and we assumed the worst. Normally silence from our clients means things aren’t going well. I was expecting to hear that business is really soft and there isn’t much to be done about it. What we heard was, yeah business was a little soft, November and December will probably be flat year on year, but he was much more interested in all of the new projects he was working on. They had just been awarded a big piece of business that will start in January that will create an entire new product line for them that will easily feed into there other existing accounts. The also have another new product line that was just picked up by one of the largest retailers in the country. This will establish them in a new distribution channel that is far larger than any of their existing channels. This company will likely grow tremendously next year. It was refreshing to see his focus on still building the business despite the climate.
A second client we talked to this week had a similar story. His company suffered some severe set backs in October and November when his largest customer put several projects on hold. Unfortunately, for this company, the biggest customer represents almost half of his revenue (the curse of high customer concentration). These project holds sent the company into a bit of a tail spin. We finally caught up with each other a few days ago. He has salvaged one of the programs, but the better news is that he has been pursuing other business and will likely emerge with a more diverse customer base and still finish 2008 with year on year revenue growth at about 25%.
Both of these companies will likely be marketed in the first quarter of next year. Given the resilience they have shown, I think they will get a lot of attention from both strategic and financial buyers.