My expectations for 2009 are that things will get worse before they get better. On the portfolio company side, I would rather have my companies growing at a lesser rate getting closer to breakeven than growing too aggressively and burning lots of cash. Once your house is in order (see some earlier posts I made on this topic), I do see opportunities to take advantage of this environment.
As we all know, in a distressed environment prices come down. So while now may not be the best time to sell your business as multiples and valuations have come down significantly, it could be a great time to pick up technology to expand your product line. In a world where everything is cheaper, those who are strong enough to make moves can find some great opportunities. One of my portfolio companies, netForensics just did that as it picked up High Tower Software in an asset purchase. What this does is allow the company to offer its customers the ability to manage the entire security compliance lifecycle - from log management to a complete security operations center - for all sized organizations, from the smallest departmental installation to the largest enterprise. In other words, this filled a huge gap in our product line and on our product roadmap and allows us to deliver these capabilities ASAP.
So in a world where everything is cheaper, you may be able to pick up some great assets at great prices as long as you have your house in order. Rather than being a distraction, this fit right into our product roadmap and accelerated our product strategy. One other way to take advantage of this environment is by hiring great people. There is lots of talent in the market, and it is clear that expectations for total compensation have come down over the last year. Be on the lookout for these A players so you can continue building your business and be prepared for when the tides turn.