A SUPPLEMENT TO THE HOUSTON BUSINESS JOURNAL

Te recession of 2009 proved chal-lenging for businesses across almost ev-ery sector of the economy. From thecredit crisis to new regulations, businessleaders were faced with diﬃ cult deci-sions as they steered their companiesthrough uncertain times. o discussthese challenges and the predicted re-bound in 2010, we invited four execu-tives to share their experiences, lessonsand predictions for the coming year.

Phil Morabito

, CEO of Pierpont Commu-nications moderated the discussion. Joiningthe panel were:

Keith Cole

President and Chief Financial Oﬃ cer,Delcor USA

Ken Jones

Director, Center for Entrepreneurship,University of Houston-Downtown;Principal, KenJones Partners

Vince Foster

Chairman of the Board andCEO, Main Street Capital Corporation

Curtis Brown

CEO, Rimkus Consulting Group

Sponsored By:

REBOUND

ROUNDTABLE

REBOUND

ROUNDTABLE

ADVERTISING SUPPLEMENT TO HOUSTON BUSINESS JOURNAL

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Rebound Roundtable

Week of December 18–24, 2009

MORABITO:

We’re going to kick itoff with our first question. Howwould you use this current eco-nomic environment and impendingrebound that’s coming as a strate-gic advantage for your business?

BROWN: Our industry sector is coun-tercyclical where we’ve not seen adownturn, per se. Our business hasgrown over the past year, and we’vebeen very fortunate in that regard.Some of our smaller competitors havedownsized so we’re looking at it as anopportunity to grow by adding newoffices and adding to our services.COLE: We’re trying to take marketshare. For us it’s been laying a founda-tion that will allow us to take advan-tage when the market ticks up. We’rein construction, following the new con-struction cycle mostly for oil and gas.It’s nice to get the foundation laid sowhen you get the chance to execute,you can, profitably. That’s where ourfocus has been, from people to divi-sions to how we operate and how webid. We’ve had time now to breatheand actually take care of that.FOSTER: You’d have to characterizethe current environment as highly op-portunistic. If you’re able to survivewith your balance sheet intact and youhave some liquidity, everything outthere is for sale and on sale, and youcan really upgrade your staff. 2010 isalso the last time we’re going to see a15 percent long-term capital gain rate— it could be a banner year for M&A.But you have to have liquidity and thebalance sheet.JONES: I would like to take issue withthe phrase “impending rebound.” Idon’t think there is an impending re-bound, and I don’t think the term willbe defined the same way it has in thepast. I don’t think anything will everbe back to where it once was. Thependulum has swung so far on thedebt side that it’s going to require atotally different set of logistical re-quirements to do the same thing. Ithink it’s going to be a long, long timebecause it hit so many sectors. I don’teven know what the trigger will be forthe definition of when we’ve startedthe rebound.

MORABITO:

How did you seek tobenefit besides acquiring new em-ployees? And what did you do tomaintain positive employee mo-rale, spirit and productivity whenthings were tough?

BROWN: The key thing we did wascommunicate with our people. Wehad some positive results to tell them,so that was pretty easy for us to do.They knew what was going on, so itgave them a little bit more ease indealing with what they think might behappening.FOSTER: We had some downtime inmy business because we went a cou-ple of quarters without making anyinvestments or buying any compa-nies. I’ve always had an objective foreach of my people to be involved in anot-for-profit, whether it’s education-al or philanthropic. We took this yearto allow one of our guys to becomepresident of the KIP Academy board.Another has a treasurer-type positionat Ronald McDonald House. I think itdevelops their character, their person-ality, their set of contacts, and it helpsour reputation in town. It’s better tokeep people busy than sitting aroundwondering about their future. Thatwas the challenge of last year.COLE: Our goal is to grow this compa-ny, and it was an interesting year to tryto start that. Part of it was rebrandingwith a new name, a new image and anew logo. That really excited people.Since our business is new construc-tion and that cycle goes up and down,there were some layoffs. But we’vebeen able to hire some of them backas things pick up. Everyone is seeingthe positive end and it was just a briefblip for their lives.And also with the downtime, you canspend more time and money to de-velop your employees and show themthat they’re a part of the future thatyou have coming.JONES: I’ve got 500 students and ev-erybody knew somebody who hadbeen laid off or lost their job. There’sgreat concern with those coming intothe job market who have to competewith the folks who have been laidoff. The bar for competition has beenraised, and I think it increases the ac-countability requirements that peoplehave to prove their worth.The fear factor runs pretty rampantdepending on the industry.

MORABITO: What have you donein a leadership role to positivelyimpact your business as we looktoward this upcoming 2010 recov-ery?

COLE: It’s laying that foundation so youcan take advantage of the rebound.We’ve been aggressive in changing theway we sell, how we brand and howwe market — things we’ve never donebefore. When the market is down, youhave to be aggressive. The companywon’t be the same, it’s going to growbeyond what it used to be. As theeconomy starts to tick up, the fruits ofthat labor should pay off.BROWN: I’ve tried to lead by example.I’ve gone out and seen a lot more cli-ents on a national basis and tried tohave a positive impact with those cli-ents so they will stay with us for thelong-term.FOSTER: I’ve decided to get a lot moreinvolved in the legislative activitiesthat impact my business and my share-holders.I try to get involved with writing toour congressmen and senators, tryingto advance some of the small businessfunding legislation that’s out there. Istarted getting involved in our tradeassociation and led a trading seminar.I normally don’t like to train my com-petition, but since we get governmentfunding, we need visibility and credi-bility with the government. Sometimesyou need to play ball and train thecompetition.

From Left to RightFront Row: John Beddow, Houston Business Journal;Keith Cole, Delcor USA; Mark Miller, Strategies forSuccess; Phil Morabito, Pierpont Communications;Kenneth Guidry/PKF Texas.Back Row: Gram Painter, Sterling Bank; Vince Foster,Main Street Capital Corporation; Curtis Brown, RimkusConsulting Group; Ken Jones, Center for EntrepreneurshipUniversity of Houston-Downtown.

Week of December 18–24, 2009

Rebound Roundtable

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JONES: There’s a lot of new market op-portunity. I went to the conference forthe Action Bank. There are lots of newplayers trying to figure out what newmarkets they may be able to go after,as well as the incentives that the gov-ernment is trying to provide. There’ssome upswing there.

MORABITO: Let’s get into somedetails for next year. Is anybodyplanning on doing anything withtheir pricing for next year?

COLE: From our point of view, we’requoted. Our ability to raise prices isonly as good as our competitors’ will-ingness to do the same, so you neverknow what’s going to happen. Whenyou come out of a downturn, there’s aperiod when people are just trying tobuy work to keep their doors open. Ifthey made it this far in the downturn,they’ve got to go three, maybe six,months before something really ticksup. They’re going to just try to surviveand then perhaps you will see pricescome back up.JONES: I’m seeing a lot of situationswhere the sales cycle has elongated.What used to take three months nowtakes five, and what used to take sixnow takes eight. Companies are start-ing to adopt shorter sales cycle productmixes with what their run-of-the-millproduct might be. And they’re addingmore features and pizazz to the prod-uct to keep their prices where theywere, but there’s still margin degrada-tion.FOSTER: I think a lot of companies areredefining what was core to them andtaking a broader view of where theirproducts or services may have a mar-ket. That might result in some repric-ing because you’re in different mar-kets. I have billion-dollar LBO firmscall me about providing $30 million offinancing for one of their companiesbecause they can’t find it anywhereelse. So I’m using the same pricing,but I feel like I’m taking a lot less risk.I’m dealing with more sophisticatedcounter-parties.As you start shifting your target mar-kets, you have to rethink who you’repartnering with in order to not getout-negotiated.BROWN: Our pricing strategy reallyhasn’t changed that much in the lastyear. And it’s really driven to a largeextent by the situations that our clientsare in during this recession. Some ofthem are doing well and some aren’tdoing so well. For the ones that are,we’re able to raise our prices a littlebit, and for those that are not, we’retrying to hold the line.

MORABITO: Let’s talk about spend-ing some money. Do any of thecompanies here at the table haveany plans for capital equipment ortechnology purchases?

FOSTER: We’re rethinking real estatebecause a lot of our companies leasedduring the boom. We would havebeen better off owning this real estateand controlling the destiny of our oc-cupancy, because as I go from big tosmall, there’s volatility in our portfo-lio. One of the more intractable itemsis that these lease obligations are re-ally hurting our flexibility, so I found atop real estate advisory firm in Austinto help us. There were a lot of valuablelessons learned during the last year.BROWN: We see some unique thingswith regard to real estate as well. Welease thirty offices across the country,so we’ve gone to a real estate adviseras well. They’ll negotiate a longer-term deal for less per square footbecause prices across the country aretypically down now. That has actuallybenefitted us.COLE: Assuming that most companiesprobably put off any purchases overthe last year or two, you’re going seenatural demand increase. I think mostcompanies will buy more, but if pricesare suppressed, what do you do in themiddle to get the same return? Wecan buy things we used to rent or leaseand start getting efficiencies from acost point of view back into your in-come statement. I think all compa-nies are going to look at some way tosqueeze more out of the middle.JONES: It gets back to that four-letterword: cash. If you have cash, there aresome great equipment buys out there.If you want to upgrade your shop orproduction facility and you have thecash to pull that off, you’re getting60 or 50 cents on the dollar for brand-new equipment.

MORABITO: What are your plans inmarketing and communications inthe upcoming year? Are you plan-ning on being a bit more visiblethan you have been in the past ?

BROWN: We’re planning to hire aPR firm to help capture more marketshare. Internally, we looked at how wecommunicate among our salespeoplebecause we think we can share andgrow more leads within our company.Externally, we rolled out several newe-mail marketing campaigns on a na-tional basis that have been very effec-tive. We’ll continue to do traditionaladvertising in different publicationsthat fit our industry.FOSTER: There’s one thing you needto think about communication in this

Our business model is simple:we know how to influencethe way people think.

PIERPONT COMMUNICATIONS combines the very best in marketing expertise withdynamic media relations counsel. We will help you achieve and exceed your businessobjectives.

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“I think a lot of companies are redeﬁning what was core to themand taking a broader view of where their products or services may have a market.”

-Vince Foster