As the most prestigious ranking of the fastest-growing companies in America, the Inc. 5000 gets business owners wondering what it actually means to be a top-rated operation in today’s market. What do the companies at the top of the list have in common, and which ones are doing particularly well in the face of economic uncertainty? While it is true that the stock market recently saw larger declines than even 2018’s fall at the same time as the yield curve inverts (often a recession-bellwether) it’s worth asking how immediate the impact of this recent downturn is on mid-market companies.
CEO Ismael Wrixen, whose experience is founded in bulge-bracket investment banking at Citibank and Morgan Stanley where he executed several high profile public deals (namely in the technology sector), shares that while stock market volatility lowers both gains and investor confidence for public companies, these downturns are not enough to upset the decade of strong gains and record-high valuations that have firmly seated in mid-market tech companies. Many of the businesses on the Inc. 5000 are not yet household names, however, the high growth rates they have been able to achieve point to just how strong consumer and investor confidence have been over the last 10 years. As Ismael points out in a recent interview with ABC News, the Inc. 5000 takes an average growth over the last three years of a company’s revenue, and the reason we are seeing so much standout growth from the top of the list (#1 ranked company Freestar grew 36,680%) is these bootstrapped companies capitalizing on consumer confidence in the last 10 years.
Notably, with the newly released Inc. 5000 list featuring innovative companies disrupting the industries in which they operate, we highlighted that over a quarter of the top 25 are software-as-a-service (SaaS). In a recent report covering Technology M&A Market Activity so far in 2019, Ismael affirms that the robustness of the mid-market technology M&A sector is weathering the ongoing economic uncertainty.
In fact, FE International is seeing companies become market leaders through the very act of acquiring new technology, which is a strategy adopted by business leaders looking to foster growth through bolt-on fast-growing B2B and B2C technologies, which allow them to capitalize on strong revenues in the digital space. Take Vimeo, who tried to build in-house livestreaming software only to end up acquiring it when they bought Livestream. They are now the market leader in non-advertised video platforms for livestreamed content. Often, the way to become a market leader is through deploying new technologies, something that SaaS businesses are doing very well in today’s climate due to the scalable business model, investors’ preference for recurring revenue and consumers’ preference for the subscription model.
Watch as Ismael explains what the rocky geopolitical waters mean for M&A, technology acquisitions used to drive inorganic growth and what we can expect from the top of the Inc 5000:
CEO Ismael Wrixen has built FE International into the global market leader in mid-market technology mergers and acquisitions. He has overseen the sale of hundreds of millions in online businesses including the sale of the popular marketing software Juicer, the accounting software, Less Accounting, and the acquisition of Drip by Leadpages, all conducted with FE International as sole advisor. This culminated in FE International’s recognition on the Inc 5000 2019, following its rank on the Inc 5000 EU.
Part of the value of the exit planning Ismael is able to offer FE clients comes from his unique perspective and comprehensive understanding of global economic conditions, buyer intent and M&A trends. Most recently, Ismael’s curiosity and his drive to educate the technology M&A space led him to produce FE International’s Mid-Year Technology M&A Report, which covers valuation trends in 2019 as well as buyer sentiment, and can be found here.