The sell-out state

| Print |  Email
Articles - Jan/Feb 2012
Thursday, January 19, 2012

 

0112_SelloutState_07
U.S. Bank’s history in Oregon dates back to 1891. It's owned by U.S. Bancorp in Minneapolis.
// Photo by Alexandra Shyshkina

In the global market, mergers and acquisitions are a regular part of the business practice, and historically venture-backed companies are built to sell. And although stories about buyouts make the headlines, there are still hundreds of Oregon-owned companies that haven’t sold. So any imbalance between big and small, between the eaters and the eaten, begs the question: So what? Does it matter if Oregon-owned companies are acquired by out-of-state firms? What kind of impact does this have on Oregon business and community?

The answers are complex, and among business leaders, there isn’t necessarily agreement. From an individual business perspective, a focus on exit strategies “is harmful,” says Raghu Raghavan, CEO of Act-On Software, a Beaverton-based provider of marketing automation software that last summer became one of Oregon’s acquirers, buying the assets of California-based Marketbright, also a marketing automation provider. “If you’re thinking about being acquired, you don’t optimize the company for growth,” says Raghavan, pointing to Nike as an example. "A company getting to that scale is not thinking about exits, they’re thinking about markets.” Act-On has grown from eight to 58 employees in two years and is on a path to triple revenue in 2012.

If thinking about getting out too soon is harmful, so is an exclusive focus on starting up. “There’s a love affair with starting new companies that can be very damaging,” says Andrew Nelson, a professor of management at the University of Oregon. “We need more attention to the very difficult stage of actually growing them.”

Nelson cited as an example the popularity of Startup Weekend Portland. “What happens after that weekend?” he asks. That love affair with the new, the small and the not necessarily directed extends to the state level, Nelson suggests. Unlike Seattle or San Diego with their vibrant biotech industries, “Oregon has been reticent to place bets in certain sectors,” Nelson says, preferring instead “to be all things to all people.”

Such diverse offerings may explain why Portland is such a buyer’s market. Danone acquired YoCream because the company was a “center of excellence,” with “expertise” in frozen products, unchartered territory for the French conglomerate, says spokesman Michael Neuwirth. The acquisition also reflected Danone’s “glocal” approach: “global in scale, local in business, tied to the earth and land in which we work,” says Neuwirth.

There’s no data showing what happens to Oregon companies after they’ve been sold, whether as a group they get bigger and better, or smaller and disappear. According to Tim McCabe, director of Business Oregon, the impact is wide-ranging. He cites companies such as Hermiston-based Snack Alliance and PV Powered in Bend, firms that were acquired but then continued to grow in Oregon.

Then there are financially struggling companies such as Jeld-Wen, “where outside purchase kept the business going and employing hundreds here in Oregon,” says McCabe. Tazo Tea falls into yet a third category, companies “that are purchased and do leave the state down the line,” he says.

For McCabe, the acquisition dynamic is almost irrelevant. “The bottom line is we work to keep companies and jobs growing in Oregon, whether it’s an Oregon-owned firm or not,” he says. Sean Robbins, CEO of Greater Portland Inc., echoes that view. Eighty percent of job growth comes from existing companies, he says. But in the global M&A marketplace, and in a city and state that isn’t a hub of private equity or venture capital, the critical factor isn’t so much maintaining local ownership but identifying opportunities to grow jobs even in the case of an acquisition — an approach he says is part of Greater Portland Inc.’s 2012 Work Plan.

Others take a less sanguine approach to the loss of some of Oregon’s most iconic companies, with even those who sold expressing some ambivalence. “A lot of the values that we created are still there, but it’s not the same family-owned company,” says Gun Denhart of Hanna Andersson. “It’s corporate culture focused on the bottom line.”

Dave Chen is more explicit about the downside of becoming a corporate colony. “When something is acquired, it becomes a division or unit, you lose that company’s contribution to the community and their investment in the community. The impact is terrible.”



 

Comments   

 
Juvenal Goldstein
0 #1 DiasporaJuvenal Goldstein 2012-01-23 10:46:40
Oregon is a hostile business environment and Portland is a branch office town.
Quote | Report to administrator
 

More Articles

6 highlights from the Craft Brewers Conference

The Latest
Friday, April 17, 2015
thumbPHOTOS BY  JASON E. KAPLAN

The 32nd annual CBC attracted a record number of attendees (11,000)  to the Oregon Convention Center.


Read more...

The best crisis is the one you avoid

Contributed Blogs
Wednesday, April 15, 2015
crisisthumbBY GARY CONKLING | GUEST BLOGGER

Avoiding a crisis is a great way to burnish your reputation, increase brand loyalty and become a market leader.


Read more...

Grassroots movement pursues carbon bills

News
Tuesday, February 24, 2015
eventthumbBY KIM MOORE | OB RESEARCH EDITOR

A partnership of a grassroots environmental organization and a youth group is striving to build community and business support for carbon price legislation.


Read more...

Much ado about data-driven organizations, for good reason

Contributed Blogs
Monday, April 13, 2015
bigdatathumbBY GRANT KIRBY | OP-ED CONTRIBUTOR

The mega-shift from technology-driven to data-driven organizations raises questions about Oregon’s workforce preparedness.


Read more...

ZoomCare rolls out new on-demand health clinics

News
Monday, March 02, 2015
zoomcarethumbBY KIM MOORE |  OB RESEARCH EDITOR

Portland-based healthcare provider ZoomCare said it plans to “remake American healthcare” by expanding its on-demand urgent care model to emergency, surgery, dental and primary care, among others.


Read more...

Opening soon: 3 of the coolest new breweries in Oregon

The Latest
Thursday, March 19, 2015
brewthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

There are 278 companies licensed to operate as brewery, according to the Oregon Liquor Control Commission. Here are three new beer-making hubs slated to open soon.


Read more...

6 development projects reshaping Bend

The Latest
Thursday, April 09, 2015
bendthumbBY JACOB PALMER | DIGITAL NEWS EDITOR

Bend has reclaimed its prerecession title as one of the fastest growing cities in the country.


Read more...
Oregon Business magazinetitle-sponsored-links-02
SPONSORED LINKS