This Week's Herman Trend Alert Purpose Emerging as Important Driver of Engagement

The Herman Trend Alert March 3, 1999 Consolidations Observers of the corporate scene watched a plethora of consolidations as one roll-up after another consumed a wide range of industries. This move has been especially visible in fragmented industries, mostly populated by traditional main street businesses or "mom and pop" firms. The strategy was to assemble a number of companies, then merge them concurrent with an initial public stock offering (IPO). The terminology to describe these new entities, formed practically overnight, is "poof" companies. While some negotiations were covert, in many professions and industries much of the activity was overt enough that it was practically obvious what was happening. Some sponsors and venture capital folks are now using a different model. Consolidators continue to buy companies, albeit very quietly. They glue them together as a single operating unit, planning to take the new organization public when market conditions improve. Secrecy in the buying habits of these company builders produces some challenging situations for those on the outside . . . who want to be inside. Investors and other opportunists must now rely on networking, gossip, and rumors to learn what's happening in various venture capital circles. Attempts to gain information can be a frustrating, exclusionary experience. This model is more capital-intensive than the poof model, as it requires more borrowing. Consolidators are unable to immediately use stock as compensation to current owners. However, this new approach has a potential for greater acceptance by Wall Street; when the new companies go public, they are fully integrated and have an operating history. Though this history may be brief, there is no smoke being blown about how great the new company will be. Instead of trusting proforma business plans and the "wow factor," investors can see precisely how the company has operated in the real world. Expect consolidation to continue. Mergers, acquisitions, and all sorts of combinations will produce dramatic returns to entrepreneurs . . . while creating powerful companies that will dominate their particular industries. New players with multi-faceted capabilities will emerge overnight. Most activity will be with smaller companies, but the big guys will be mixed into this movement, too. © Copyright 1998- by The Herman Group, Inc. -- reproduction for publication is encouraged, with the following attribution: From "The Herman Trend Alert," by Roger Herman and Joyce Gioia, Strategic Business Futurists. (800) 227-3566 or http://www.hermangroup.com. The Herman Trend Alert is a trademark of The Herman Group, Inc." WHO SENDS OUT YOUR NEWSLETTERS? We are convinced there is no better choice than ours! We have happily used DataBack Systems to deliver The Herman Trend Alert for over 10 years and. Visit their website (http://www.databack.com) or call Byron directly at 503.941.0427. You'll be glad you did. IS YOUR EMPLOYER AN EMPLOYER OF CHOICE®? Our effective, onsite seminars, workshops, and consulting can help you get there. We offer 1-, 2-, 3-hour, and full-day programs to help you communicate what it takes to become an Employer of Choice® and inspire your folks to get it done. In the future, being an Employer of Choice® will not be optional. Call Carol at 336-210-3547 to arrange a no-obligation conference call. Or order the electronic version of the Employer of Choice book on your desktop for only $17.80 @ http://hermangroup.com/store/books_all.html#2. STRUGGLING TO FIND THE PEOPLE YOU NEED? VETJOBS CAN HELP! Recently, hundreds of thousands of jobs remain unfilled due to a lack of capable people. If you are looking for qualified candidates, you need to hire a veteran using VFW-sponsored VetJobs, the largest military employment site on the Internet. Thousands of returning veterans are looking for good jobs now. Mention this ad in The Herman Trend Alert and receive a 10% discount on job postings. Call Ted Daywalt at 877-838-5627 or inquire at info@VetJobs.com. Herman Trend Alerts are produced by the Herman Group, strategic business futurists, Certified Management Consultants, authors, and professional speakers. New subscribers are welcome. There is no charge for this public service. The Herman Trend Alert is received by over 30,000 subscribers in 78 countries, in addition to other websites and printed magazines. Do you enjoy receiving this weekly e-mail update? Contact us about our co-branded Trend Alert service. Click here to sign up for the Herman Trend Alert. Subscribe or Unsubscribe to weekly Herman Trend Alert View this week's Herman Trend Alert Archived Weekly Herman Trend Alerts

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