For Bluedrop Performance Learning founder and CEO Emad Rizkalla, any entrepreneur considering growing their company through an acquisition must remember one thing.
“Acquisitions are inherently risky,” says Rizkalla. “Most of them fail to deliver on promises. With access to capital, I believe innovation and careful marketing segmentation is the key to growing local companies. Being based off the beaten path means you need to specialize. For Bluedrop, we choose to tackle areas and needs that are poorly serviced or even non-existent.”
Bluedrop Performance Learning is a leader in e-learning, simulation and training. The company boasts clients ranging from Boeing to the Thunderbird School of Global Management. Bluedrop Performance Learning stock is up 28.57 per cent so far this year.
“There are great simulation companies focused on helicopter pilots, but there is little focus on simulation for the crew working in the back of the helicopter,” says Rizkalla . “That is where Boeing and Bluedrop decided to partner to build the world’s best simulation technology for the rear crew.”
The company is no stranger to acquistions. For example, in 2013, Bluedrop Performance Learning acquired Atlantis Systems Corp., a company boasting clients who made up some of the biggest names in the defence sector such as Lockheed Martin and Sikorsky.
“The typical challenges of combining cultures and keeping clients of both companies happy and committed were not an issue for us,” says Rizkalla. “We had a spectacularly successful merging of companies (and) cultures and improved our service delivery in the process. Our key lesson was that you need a serious amount of working capital to acquire a company or just continue to grow at a blistering pace. Bluedrop grew 550 per cent in a five-year period. You can never have enough working capital.”
Universities: the ‘gas stations’ of innovation
Rizkalla also applauds the partnerships that universities provide.
“Universities are an important part of the innovation ecosystem,” he says. “At their best, they are the gas stations for an innovation economy providing the fuel companies need to grow — sharp minds. But they can also be a source of knowledge transfer and contract research. The R&D that small companies do has to be more D than R by necessity — but universities can help to provide a great deal of know-how and input in building great products. We have recently starting leveraging Atlantic Canadian universities in our R&D — and the results have been very positive.”
The 2014 Ivany Report stresses the need for business growth in the province. Many organizations such as Propel ICT are calling on more companies to scale their businesses.
“Acquisitions enable firms to acquire new, enhanced or complementary capacities, capabilities or services,” says Rich Billard, chief executive officer of the Halifax-based Atlantic Canada Aerospace and Defence Association.
But he says acquisitions are only a viable option for growth at the right time.
“Depending upon the company’s cycle/stage of business and/or the status of its customer and clients,” says Billard. “It is quite appropriate for small and medium-sized enterprises (SMEs) looking to achieve rapid expansion as it can be quicker, cheaper and a less risky proposition than methods of expanded marketing and sales efforts. Acquisitions should help achieve synergies, growth, market share, economies of scale and marketing.”
Getting bigger on defence
Bluedrop Performance Learning is one of dozens of companies that operate in the province’s growing aerospace and defence sector.
“The aerospace sector in Nova Scotia generates $733.3 million and the defence industry contributes $1.4 billion,” says Billard.
He says federal defence contracts such as the recent National Shipbuilding Strategy are driving investment and business growth for Nova Scotian companies from major global players, allowing Nova Scotian companies to grow. University collaborations with industry and Nova Scotian SMEs are positioning provincial firms well for the time they are ready to scale, adds Billard.
“Universities help identify research needs, assist technology, sometimes leverage funding, facilitate commercialization and in some instances assists in the creation of spinoff ventures,” he says. “Firms can gain access to new employees from the respective graduates.”
He says the Lockheed Martin and QRA collaboration is just one example of success.
According to Delloitte, the global aerospace and defence sector is poised for strong growth in 2017.
“These are interesting times,” says Billard. “Our businesses export internationally, particularly as it relates to marine defense. Long-term projections outlook finds global aerospace and defense (A&D) industry revenues expected to resume growth, driven by higher defense spending. This bodes positively for our local companies.”
Published February 27, 2017 - 4:17pm