From the Editor
Dealmakers Juggle the Corporate Lineup
WHERE THE MONEY IS The Washington Post's annual report on the area's top businesses, including a ranking of the largest publicly owned companies, corporate profiles and much more.
(Nathaniel Vaughn Kelso - The Washington Post)
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Monday, May 14, 2007
Take a good, hard look at the list of companies on The Post 200. It might be the last time you see many of those names.
Today's dealmaking climate is so overheated that the lineup is likely to change noticeably over the next year. Some of the largest companies in the region will soon have new owners, moving their headquarters to other cities or even countries. Reston student loan giant Sallie Mae recently agreed to sell itself for $25 billion to private investors. MedImmune, the metropolitan area's most successful biotechnology company, is about to become part of British drug king AstraZeneca. A pair of private-equity titans is snapping up the District's Harman International Industries and its high-end line of audio gear.
And those are just the transactions announced last month.
The list of deals goes on. Homegrown XM Satellite Radio is attempting to merge with New York rival Sirius. CarrAmerica, long a leader in local commercial real estate, is now part of global heavyweight Blackstone; so is hotel owner MeriStar Hospitality. Mercantile Bank joined Pittsburgh-based PNC, like Riggs before it. WebMethods, the software firm born in a Burke townhouse, is being bought by a German company.
The exodus can be disruptive to workers and a nuisance to local economic development efforts. But it need not be cause for undue consternation, argues economist and author Richard Florida, a professor of public policy at George Mason University.
He says the changes are simply a reflection of metropolitan Washington's place in a sprawling business corridor, stretching from Richmond to Boston and anchored in New York. The same forces that have erased companies from The Post 200 help the area attract new ones to take their place.
Think of the region as "the sunbelt of the greater New York megalopolis," Florida said.
A steady stream of talented people regularly migrate to the area because of its opportunities -- and favorable climate relative to the rest of the northeast -- and continually reinvigorate the corridor's "southern suburbs," Florida said.
What problems persist are mostly self-inflicted, such as the rise of traffic congestion, he said.
Accounting troubles, too, have sidetracked some of the most prominent corporations in the region over the past year. Mortgage finance giants Fannie Mae and Freddie Mac, which have long been working to untangle their books, were joined in the past year by Sunrise Senior Living, Radio One, AES and a host of others in reporting errors. Many blame, or credit, the tough accounting standards established by the Sarbanes-Oxley law on corporate governance.
Corporate takeovers and operational problems can leave workers leery about their prospects for spending a career at any one company. Often, particularly in sales involving private-equity firms, the new owners immediately begin looking to cut "redundant" costs, a euphemism for jobs.
The survivors are those who hone their skills and keep watch for new opportunities.
