I spent the past two days at the Ernst & Young’s Strategic Growth Forum in Palm Springs which brought together hundreds of CEO’s and investors – it has been a great event. What I like most about these types of meetings are all the factoids one gathers – granted they are buried among all the platitudes of self-proclaimed successes and words like “alignment, vision, synergy, innovation, blah blah blah.” You get the story. But between the lines I heard some really interesting things. Here are some of them:
• Magic Johnson of Magic Johnson Enterprises (and the Lakers) raised a $1 billion fund focused on urban real estate opportunities, a $550 million fund to back growth companies in the inner city, and next week will announce yet another fund – he also told some funny stories about Larry Bird
• It costs $1 million a day to run an offshore oil drilling rig
• Lee Scott, former Wal-Mart CEO, said that at 12:01am on the first day of each month Wal-Mart experiences the largest spike in sales as government benefits hit people’s accounts
• At Wal-Mart they sell mostly large bags of pasta in the first few days of each month; at the end of the month they sell mostly small bags of pasta when people realize they did not buy enough pasta that month
• The top six IT companies accounted for 33% of all M&A activity in 2008 (this year it will be closer to 50%) so if you are selling an IT company, there is a really good chance you already know who the buyer is
• Of the more than 7,000 private equity and VC-backed companies, only 500 have a real chance of being a public company so expect a lot of M&A over the next two years as investors look to get their money back
• Doug Leone of Sequoia thinks the “dream gene has been activated again”
• Carol Tome, CFO of Home Depot, claimed that home improvement expenditures have historically been about 4.5% of annual GDP but spiked earlier this decade to 6.8%; it is now languishing around 2.5%
• 4% of Home Depot’s customer base accounts for 30% of its revenues
• Howard Schultz, CEO of Starbucks and a great guy, took 10,000 employees recently to New Orleans and conducted 50,000 hours of community service
• Starbucks will spend $300 million to see that all of its employees have life insurance – and there are 200,000 employees
• Starbucks has the largest WiFi network in the USA
• The accountants strike again: FASB 141R will require medtech and biotech companies to “mark to market” milestones payments on a regular basis which will cause accounting havoc for these companies
• Cerberus thinks it will ultimately recover 40% of its bankrupt Chrysler investment – but only because of its ownership of Chrysler Financial
• The average private equity-backed company was only 2.2x leveraged (I doubt this last one, frankly)
Oh, and Palm Springs is really beautiful.