As the world of spine continues to churn and burn, TSB would be interested in getting our readers perspective on some of the small companies that continue to grind it out in hopes of sustaining their existence, and eventually selling their respective ventures for some insane multiple that no longer exists? TSB's observation is that there are many deals to be had for the Zimmer's or Biomet's that need something to make them a viable player in the spine marketplace. Considering that Zimmer has all this cash, now may be the time to pull the trigger. The potential exists that by making the right acquisition these organizations would get some respect and move up a notch or two in the spine hierarchy.
The time may be right to pick up a great deal. Regardless of some of the recent investments made in the industry, why would independent investors continue to sink money into some of the companies that continue to struggle? Some of these "dogs" have been around five to seven years, they continue to struggle in increasing revenue, they lack leadership and creativity in bringing some ground breaking technology to the market. How scary is it when you hear of scenarios where prominent surgeons, the who's who, have been thinking of starting another "me too" company. Why would anyone invest? Because the surgeon is a well know individual? Does anyone believe that there is that much money to be made with another "me too?"
If a company is five years and out, it would be safe to assume that they have missed the boat. With the amount of hype that has surrounded some of these ventures, its a wonder that more companies haven't folded with the exception of those that have surgeon investors using their products. And therein lies the problem. When due diligence is performed on some of these companies, 60, 70, 80% of their revenues come from investors. Why would anyone buy that company or look to invest into that business model? Haven't we all learning a lesson from the likes Orthofix being hoodwinked by Blackstone Medical? Upon speaking with some CEO's, the valuations that they dream of having less to do with reality, and more to do with fantasy.
Recently TSB was having a conversation with an investor who told us that a company that his consortium had invested in, had burned through $20-30 million dollars in a four to five year period with a little or nothing to show for it in terms of revenue, and on top of this the CEO failed at two other ventures. Is there something wrong with this picture? Let's say you are an investor in this company, and the intent was to flip this on future IP that needs to go through an IDE, do you invest any more capital?
Who are some of the companies that continue to flounder and who are some of the companies that have the right technology that would help the Zimmer's and Biomet's in spine? TSB wants to know what our readers think?