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Thursday, May 26, 2022

Fast Get Faster Amid Recovery

The 50 fastest growing private companies in the greater Valley rode the economic recovery, with their revenue rising at a pace substantially greater than in the recent past. The members of this year’s list, which ranks the companies by two-year revenue growth from 2011 to 2013, experienced an average growth rate of 110 percent, compared to 88 percent on last year’s list and 75 percent in 2012. But one thing hasn’t changed. Digital and online companies led the charge, accounting for nearly a third of the companies, including No. 1 AudioMicro Inc., a Sherman Oaks firm piggybacking on the phenomenal popularity of short-form video on YouTube. It reported a 936 percent increase in revenue over the last two years. (See story above). Among the other companies in the sphere were SADA Systems Inc., a North Hollywood cloud computing firm; Scorpion Design, a Valencia website development and Internet marketer; and Arvixe, a Calabasas web hosting firm that was No. 1 on the list two years ago – all in the top 20. Consider Integrated Media Technologies Inc., a North Hollywood company that reported a 111 percent rise in revenue to $54.4 million, landing it No. 11 on the list. That’s almost double the 58 percent growth the company reported between 2010 and 2012, which put it at No. 23 on last year’s list. The company works in technology consulting for major businesses in the entertainment and telecommunications industries, in addition to designing and constructing digital studios – something that gave it a big boost last year. After years of working on a digital learning center for employees of AT&T Inc., Integrated Media last year was awarded a $22 million contract to design and build eight instructor stages, eight control rooms and 50 classrooms across the world for the Dallas telecom giant, including in India and the Czech Republic. Payment on the contract will be spread out over a number of years. “This has turned into a very exciting enterprise for us. It’s really taking off,” said Integrated Media Chief Executive Bruce Lyon. “Think of us as general contractors, but for technology.” The system uses a broadband network that connects all the classrooms, control rooms and instructor stages so that an instructor can teach interactively over a large geographic area. For example, technical workers can get certified on new software and hardware. Kenn Philips, chief executive of the Valley Economic Alliance, a Sherman Oaks group that works to retain companies in the San Fernando Valley and attract new ones, said growth in digital companies is really no surprise, especially with a company like Integrated Media that is heavily involved in the entertainment industry. “The entertainment community is doing very well and technology is very important for them,” he said. “Many businesses are really working on online banking, selling products online, and all these digital companies are needed to support that.” Recovering industries Another source of growing business for Integrated Media is in-house data storage. While many companies are willing to store endless amounts of data on the Internet, some companies are less trusting. “Most media and entertainment companies do not believe their assets should be stored off premises. They’re like family jewels. So they have been hesitant to use the cloud,” Lyon said. Instead, Integrated Media constructs massive server rooms such as you might see in a spy movie, with racks upon racks of data towers to keep storage offline. But growth in digital and online companies wasn’t the only notable trend on this year’s list. Also standing out was the growth in industries that suffered most in the recession. Case in point: automotive dealerships, which were nowhere to be found on the 2011 list that measured revenue growth from 2008 to 2010. This year there are three. The largest of those by revenue is Keyes Automotive Group, which reported 55 percent revenue growth and ranked No. 25 on the list. The company reported sales of $1.7 billion last year. Howard Tenenbaum, vice president at the Van Nuys-based company, said the growth has come from smart decisions made during the recession. “During the downturn, we got real estate. We took advantage,” he said. “So now that it’s over, all that stuff we picked is really starting to work.” Keyes has opened a number of dealerships in the last few years through ground-up development on that property or acquisition of existing dealerships. Just last month, the company opened an Audi dealership in Valencia, following the opening earlier this year of a Kia dealership nearby. Also this year, the company opened a Hyundai dealership in Woodland Hills, following a late 2012 opening of Hyundai Mission hills. Three additional acquisitions were made in 2009. In total, Tenenbaum said the company is up to 16 total dealerships. In addition to Keyes, North Hollywood Toyota ranked No. 27 with a 49 percent increase and Galpin Motors Inc. of North Hills ranked No. 37 with a 37 percent revenue increase. The growth of the three local companies is in line with an industry that is on the upswing. Domestic automobile wholesale revenue is expected to hit $500 billion this year, representing annual growth of more than 10 percent annually over the last five years, according to a report from IBIS World, a Melbourne, Australia research firm. A more normalized annual growth rate of 1.6 percent is project over the next five years. “The future of the industry looks bright as long as economic factors, such as per capita disposable income, continue to improve,” the report stated. Indeed, on the gross revenue side, dealerships are king. Among only seven companies on the list with revenue of more than $100 million last year, all three dealerships were among them. Smaller figures On the other side of the revenue scale are insurance brokerages. Three brokerages made the list this year, actually down from the year before, though that was impacted by the January acquisition of the largest private brokerage by revenue on last year’s Fastest Growing list, GNW-Evergreen Insurance Services in Encino, by HUB International Ltd. in Chicago. The largest brokerage by revenue on this year’s list is LBW Insurance & Financial Services Inc. in Valencia, which ranked No. 46 with a 20 percent increase in revenue over the last two years to $4.9 million. The company offers business and personal insurance, in addition to retirement services, such as individual retirement accounts and annuities. The company does more than 60 percent of its business in the property and casualty insurance realm, but Chief Executive Mitzi Like said the company is actually seeing an uptick in good old-fashioned life insurance. “Life insurance is one of those key sectors we’ve been working on,” she said, noting that the recession was a particularly hard time for the product. “People were staying away from approaching the topic, so it became untapped.” The second-largest segment of LBW’s business is employee benefits, which Like said represents about 25 percent of revenue. Another growth area is selling investment and retirement products, such as the 401(k) account, to those customers. “We are selling more other products to our current clients,” she said. “If they already had property and casualty insurance, they came to us for other products because they were comfortable with us.” In all, the list is dominated with smaller companies. After all, it can be difficult for more mature companies with big revenue to produce high double-digit or triple-digit revenue growth, which makes those that do so even more impressive. Take Menchie’s Group Inc., the rapidly expanding frozen yogurt franchise. The Encino company reported 98 percent revenue growth over the last two years, with 2013 revenue nearly hitting $188 million – good enough for the No. 13 spot. Menchie’s ranked No. 6 on last year’s list. Philips from the Economic Alliance said the overall economy in the Valley is strong enough that larger businesses such as Menchie’s and Keyes can continue their fast growth. “The downturn made all these companies strip away any inefficiency,” he said. “Now those companies are back. With the cars, a lot of people were holding on to their cars during the downturn. And Menchie’s is still growing. We’ll see them going up for a long time.”

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