How Big Companies Can Be More Nimble
By thinking fast, MDA has managed to turn an obstacle into a profitable turnaround of its aerospace-related business.
Most of us like to think that it’s only the small businesses that are quick, nimble and able to turn on a dime in response to market forces.
But Richmond-based MacDonald Dettwiler and Associates Ltd. proves billion-dollar companies can do it too if they’ve a mind to.
Witness MDA’s recent sale of its property information division (including BC OnLine) for $850 million to the American private equity firm TPG Capital. MDA says it will use the proceeds to build up its growing businesses in aerospace information systems, which includes surveillance and satellite-information distribution, and robotics.
Why is this more than just another deal by some big corp.?
Because a little more than three years ago, MDA was doing the opposite. It was trying to sell off its aerospace division to concentrate on the growing property information division. But its attempt to sell a “vital” Canadian operation to a U.S. company was blocked by the Canadian government.
Amazing how things change, eh? At the time, aerospace and satellite information work was in the dumper as everybody seemed to be concentrating on making money in the financial markets. Everybody was also getting real estate crazy, so MDA found itself sitting on a gold mine because it held the keys to real estate information gathered from its satellites.
For some time it was printing money, but now the real estate frenzy has peaked, and MDA recognizes that real estate information is no longer a high-growth industry. And, lo and behold, heavy science – specifically aerospace information – has come back into favour again.
What we have here, it seems to me, is a company that knows implicitly what it does: Gather and package information and then sell it wherever it’s needed.
When MDA was blocked in the sale of the division that built systems for space work, it ramped up its information gathering and packaging system for the real estate market. Meanwhile, it looked harder at how it could make the space division more profitable by selling information instead of manufactured systems.
I can’t think of a speedier and more innovative turnaround.
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