Attention Shoppers, There are Deals to be Had

Recently, one of our industry sources mentioned rumor was circulating that Amedica was evaluating some of the early-growth stage companies in hope of acquiring hardware that would compliment their silicon nitride Valeo portfolio. Regardless whether there is truth, it really got me thinking about the industry as a whole and what has transpired over the past five years. In many respects there is a major shift in what the future will hold for many of us, and which technology will set a precedent for future ventures. Let's face it, "me too" products no longer are attracting investors, considering that there is "mucho dineros" sitting out there looking for the right investment.

The recent economic downturn has reigned in over investing, and decreased risk taking into many ventures that have done nothing but glut the industry with products that are really not changing the outcomes. No need to elaborate on those products since most of our readers know what they are. Many of these companies thought that by designing and manufacturing a product, they were going to be acquired because their design was better. Many of those features were and are insignificant. Just because you designed it doesn't mean its good or that it is worth something. Yes, many of you will argue that you still generate revenue, but TSB must ask how? By brokering a surgeon? By signing a consultant? By enlisting a surgeon investor? Investor due diligence usually sniffs out those deals.

As pricing continues to effect revenue, many of these so called "other" companies are becoming vulnerable to competitive pricing, in addition to finding newer ways to expand market share. In many respects it's a Mexican standoff. The company, the distributor and the hospital. These companies have been looking to de-leverage themselves by cutting commissions in addition to laying people off, while needing the distributor to be interested in these products. The distributor on the other hand is looking to maximize their profitability by getting the most for their service and potentially their surgeon , and then we have the hospitals which have become smarter, squeezing the market for every dollar that they can, or, even capitating price per construct. So the only alternative to survival is to either rely on their investing surgeons, or their surgeon consultants, or cut back door deals with distributors. Many of these companies are surviving on commercial paper rolling over their line of credit to the best of their ability.

Years ago the early-growth stage mantra was that smaller companies moved quicker, were more responsive and addressed the surgeons needs. That argument has fallen to the wayside. What once worked is falling on deaf ears. Another problem that these organizations face is that many executives continue to pay themselves salaries that are equivalent to working for a legacy company. It reminds one of the Wall Street brokers that looted the system only to bring it to the precipice of disaster. Unfortunately, the government will not be there to bail out these companies when they meet their destiny.

The potential payback will be limited. Therefore, if you were in it to win it, you're now in it for the long haul. Based on the preliminary backlash to Obamacare, the days of 100% growth and a quick flip are over. So, yes fellow readers, even if Amedica is in the market the question that must be asked is, will they set another ridiculous precedent if they buy some hardware to compliment their product portfolio? TSB wants to know if our readers have heard any scuttle butt on the street?