Whether we are starting up a new program internally, or seeking an M&A opportunity, one of the major drivers as we move forward is economic impact. When you consider the economic impact of any particular endeavor, it has to be in terms of significant multiples, because, no matter what, an internal initiative or an M&A activity requires time. It requires an investment of a significant amount of time. So if you consider time as a factor of one, and you devote that one to a particular activity, whether internal or external, does it produce a two-fold return, a five-fold return, a twenty-fold return? In other words, what’s the economic impact for the amount of time invested.
In the past, I have seen a product release or M&A, as being determined by a couple specific criteria: strategic fit, and EBITDA enhancement. I would now add to that one further component: economic impact. What is the economic impact of that particular activity? And I would go even further than that to suggest that, as we evaluate going forward, we probably need to be seeing economic impact not in linear, but in exponential multiples. We are not looking for a new initiative to offer a straight line growth, regardless of whether the straight line growth is at a 20 percent level, a 25 percent level, or even a 30 percent level. If it’s depicted on a line which is linear, regardless of the coefficient, it may not be the best move because of the issue of time. What we are looking for is an exponential growth line which isn’t straight or even remotely straight, except during that initial phase-in period. From that point on, it becomes exponential. In that absence, that new initiative, internal or external, is probably not worth doing.