Thought Leadership Gallery
Technology & Life Sciences
There may be signs of recovery, but we are still coping with an unprecedented economic crisis that threatened the promise and purpose of many innovative and emerging growth companies in technology and life sciences.
Find out where those companies are today, where they're headed, and how they're going to get there, given that the economic outlook remains unclear on just about every continent.
- Capitalizing on market needs
- New opportunities and careers
- Focused growth and development
- Growth in clean technology
- Innovation and accountability
Taft Kortus
Partner
Technology & Life Sciences
In response to the recession and market downturn, how are clients focusing on the future and moving their businesses forward?
Company leaders have shifted from reacting to the downturn to focusing on shaping their strategy around what the business should look like when things recover. They’re trying to position themselves to be more dominant during, and after, recovery than they were going into the downturn. Where appropriate, companies are becoming leaner and more flexible; more important, they’re focusing on what they do best. Reducing pet projects and unfocused initiatives and getting back to their core business creates market advantages, helping them capitalize on their strengths and not get sidetracked by areas with a lower ROI or higher risk.
In what key ways have you seen business leaders in your industry apply lessons learned from the past year?
It’s about being flexible and focusing on what the business does best. This, combined with an emphasis on the bottom line, gives companies a competitive advantage. For a while, businesses were focused on great technology, business plans, opportunity, and all the “fuzzy stuff,” but they weren’t always focused on the bottom line and ROI; now that has all changed. Rather than building it and hoping the bottom line or market opportunity will be positive in the long run, companies are finding that investors, business leaders, and markets are requiring that every element be addressed. The past 18 months have provided the opportunity to be more honest when it comes to the expectations and realities surrounding their businesses. But, most important, these trends support the bigger lessons that were learned and felt by many: that every dollar should be looked at as if it were your last. However, fiscal conservatism shouldn’t stifle innovation. Leaders must balance the need to be prudent with the imperative to invest in the future.
Recessions and downturns often lead to innovation and new opportunities––how are you seeing that in the industries you serve?
New ventures are trying to address real-world problems, just as they always have. The difference now is that these initiatives seem to be more focused on everyday issues and less about buzz. There will always be new media and investment trends such as social networking or Twitter, but things such as cloud computing, business intelligence, clean energy—these areas benefit many in a tangible way. And they’ll be around for the long term. They also meet the new scrutiny of investors in today’s economy because they can pass the “bottom line” test and are part of real markets. Innovation that helps companies decrease fixed costs or increase revenues will always have a market. In addition, the advertising industry is in a state of flux at the moment, trying to figure out what it will look like through the use of the Web and mobile devices. There are a vast number of companies out there seeking to optimize advertising dollars, and there are technologies that can best show results and tap into the billions of dollars at stake as consumers reenter the marketplace with more spending confidence and everyone tries to get part of that spending.
Carisa Wisniewski
Partner
Technology & Life Sciences
In response to the recession and market downturn, how are clients focusing on the future and moving their businesses forward?
A host of nimble clients have adapted quickly and are now poised to capitalize on opportunities in the market. As a result, we’ll be seeing an increase in mergers and acquisitions—of both businesses and intellectual property. In addition, a number of clients have been able to take advantage of unique situations that didn’t exist a few years ago. Thinking ahead of the curve, they’ve locked in favorable pricing and fixed their costs at more advantageous levels. Many companies are taking a step back and asking themselves how they can do things differently and more efficiently without overextending. In the end, this thinking is good for the economy.
In what key ways have you seen business leaders in your industry apply lessons learned from the past year?
So much of this is about improved communication with all stakeholders—from bankers to the end customer. Business leaders are getting good news out there more quickly and deepening relationships once taken for granted. For example, banking relationships are being nurtured, and clients are now appreciative when banks agree to stand behind them. Another indication of the current business environment is companies’ being proactive in locking in lines of credit and diversifying into cash. While it would appear banks and funding organizations continue to increase their due diligence and tighten their criteria, many organizations are demonstrating their resilience and securing much-needed resources. The rigor does not, in general, seem unreasonable but rather a reflection of safer investment practices
Recessions and downturns often lead to innovation and new opportunities––how are you seeing that in the industries you serve?
This isn’t like 2001, when growth in the technology sector wasn’t sustainable because company values increased faster than their technologies evolved. Now it’s all about long-term efficiencies—taking out head count, for example, and using software instead. Innovation is still alive and kicking, and new technology has been a saving grace—especially in health care, where it’s being used to reduce costs associated with nurse scheduling or asset tracking. What we’re beginning to see is a shift in the job market that will play out down the road. Technology will help create different positions. In terms of the government’s role, it remains to be seen whether the stimulus will be as effective in fostering as much innovative change as some would like. The instinct to survive and thrive will be the key factor in companies’ use of stimulus monies in ways that have a longer-term impact.
Ken Salgado
Partner
Technology & Life Sciences
In response to the recession and market downturn, how are clients focusing on the future and moving their businesses forward?
Most companies carried large staffs during the boom times, but now they’re replacing their weaker players with stronger ones. This is possible in large part because there’s so much talent available. It’s without question an employer’s market. And because there are so many great candidates to choose from, it’s taking longer for businesses to make hiring decisions. In addition, many companies are trying to buy underfunded competitors in the technology and life sciences sector. There wasn’t much merger and acquisition activity reported in the first six months of the year, but now there are many deals in negotiation—for companies, products, and product lines. Many of these deals will be announced in the next six months. And, of course, stronger companies will be able to buy at lower valuations.
In what key ways have you seen business leaders in your industry apply lessons learned from the past year?
There has been a relentless focus on keeping the customers you have. Businesses have to watch this very carefully, because the competition is ruthless. And yet while you’re doing this, you have to find new sources of revenue. You just can’t take anything for granted. Another lesson companies have learned is how to conserve cash while continuing to invest in R&D. Some companies are cutting expenses in a number of areas to preserve their R&D budgets. Others are rationalizing R&D costs a bit. Instead of engaging in five planned forward-looking projects, now they’ll invest in three. In particular, they’re eliminating the riskier longer-term programs they would have invested in during normal times.
Recessions and downturns often lead to innovation and new opportunities––how are you seeing that in the industries you serve?
R&D hasn’t suffered from budget cuts in the same way sales and marketing departments or general and administrative staff have suffered. Technology and life sciences companies still have their eye on the future, even as they continue to rationalize their cash outlays. This is important to note, because at some point the economy will improve and these businesses will move forward and thrive again. Also, while it might seem counterintuitive to start a new business when the economy is slumping, a recession can actually be the ideal time for launching a company. In fact, many well-known and successful organizations were born during an economic slump. People often forget that Microsoft and Hewlett-Packard were born during recessionary times. These companies succeeded because their founders recognized a market need and filled it. Some of tomorrow’s most promising technology and life sciences companies are being born today. We’ll hear a lot more about them in the next five years.
Eric Rohner
Partner
Technology & Life Sciences
In response to the recession and market downturn, how are clients focusing on the future and moving their businesses forward?
Many companies are getting lean today and focusing on their core competencies. They’re cutting down so they can make sure they have the absolute right people on the bus, the ones who are critical to their future, so that when the economy turns, they’ll be nimble and able to efficiently execute their strategies. In addition, companies in the renewable-energy space are trying to make acquisitions so they can broaden their market share. They’re hiring the right people where they can, even though there are still financial issues to be confronted. Despite the uncertain economy, they know they need to move in new directions and they cannot accept the status quo.
In what key ways have you seen business leaders in your industry apply lessons learned from the past year?
A number of companies are looking to make acquisitions, but they’re being very careful when it comes to the due diligence and valuation. These buyers are expecting the companies they want to acquire to really support the financial data and projections they’re putting forward. If they can’t, the buyers are quickly moving off the deal and on to something else. Before the economy softened, due diligence wasn’t quite as thorough and purchasers weren’t quite as cautious. If you’re selling today, it’s essential that you back up your numbers and that they can withstand a serious audit.
Recessions and downturns often lead to innovation and new opportunities––how are you seeing that in the industries you serve?
Right now, the renewable-energy space has considerable momentum, thanks to the stimulus money being injected into the industry and the enthusiasm around this field. Hopefully, this has set things up really well for the future. It’s a tough economy now, but once some of the uncertainties in the current crisis get sorted out, renewable energy is going to explode. It’s ironic, but it took a bad economy, high gas prices, global warming, and a growing sense that we need to be better custodians of the planet to get us to the point where we are now. That is, we now seem to have many of the ingredients in place for a big post-recession expansion in this area.
Jason Lawson
Partner
Technology & Life Sciences
In response to the recession and market downturn, how are clients focusing on the future and moving their businesses forward?
At technology, life sciences, and other innovative growth companies, management is retrenching and more closely managing cash flow. Whether cash-positive or cash-negative, companies are watching monthly burn rates because they know how hard it will be to get another round of significant financing. At the same time, businesses are assessing how long it will take to get their technologies to market while they manage their cash outflows. The companies that can keep their eye on the goal and get to market, while minimizing the need for additional capital, will be poised for success down the road.
In what key ways have you seen business leaders in your industry apply lessons learned from the past year?
Companies have learned from the downturn not to spread their products, concepts, and ideas all over the place. They’re striving to stick with technologies they know will be cash-flow positive—products that have high marketability. Business leaders are keeping a tighter rein on the direction of their company and products. Having a cool technology doesn’t always equate to a need in the marketplace. Creativity is nice, but steady cash streams are better.
Recessions and downturns often lead to innovation and new opportunities––how are you seeing that in the industries you serve?
One innovation that we’ll carry out of this economic mess is improved management skills through the recent enforcing of accountability. This accountability has shown up at all levels—from management to marketing to the receptionist. It boils down to keeping your key people and managers accountable to investors when it comes to delivering results for the business. Many technology-company managers are first- or second-generation business owners, so accountability isn’t always the first thing that comes to mind for them. They’re figuring out that stakeholders will pay attention to a forecast or projection and demand accountability for it. Company leaders are also becoming more comfortable with a range of possible outcomes, akin to an “expected cash flow range” as opposed to a single estimate. This estimating skill, which is also about accountability, is definitely being sharpened in the downturn.
Technology & Life Sciences Contacts
Taft Kortus
206-302-6377
Jason Lawson
310-295-3795
Eric Rohner
858-627-1461
Ken Salgado
949-623-4156
Carisa Wisniewski
858-627-1402
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