In short, history suggests that some of this year's companies will be on the Fortune 500 a decade from now and that some of these CEOs will be among the richest people in America. But we can't tell you which ones.
The superstars are far more likely than most '85 alumni to have gone public. Seven of the 10 largest 1985 Inc. 500 companies today are publicly traded, yet only 32 of the whole class of '85, or 6.4%, are public companies. (More actually went public; it's just that some have been acquired or have failed.) Not surprisingly, the public companies grew much faster than those that remained privately held. As a group, the 32 companies have created almost 60,000 new jobs since 1984; at the same time, they've increased revenues more than 10-fold.
The Silent Majority
As a rule, the public companies on the list have the highest profiles. But they're not typical: the Inc. 500 is really the domain of Main Street entrepreneurs rather than Wall Street types.
Today Al Caperna, the label maker, is a much more typical symbol of the Inc. 500 than Microsoft boss Bill Gates is. Sales at Caperna's company, Century Marketing, have more than tripled from $4.6 million in 1984; Caperna has spun off a related company, hired more employees, invested in another company that also made the Inc. 500, and, recently, launched yet another start-up. Century Marketing is still privately held, still in the same town, and still profitable. It grows steadily, employs 240, and keeps right on making labels for customers such as bicycle shops and florists.
What's remarkable about "the silent majority" is their numbers, their steady growth, and their stability. Ten years later, almost half the 1985 Inc. 500 companies are still privately held and still under the same ownership. Most of them are in the same business and in the same metropolitan area. The only difference is that, on average, they're now substantially larger. The 201 private companies for which we have statistics have increased sales an average of 15% each year over the decade. That's far less than the 30% average annual revenue growth of the '85 graduates that are now public, but it's still impressive over the long haul and as an average. As a group, those 201 enterprises have grown from $2.1 billion to $8.6 billion in sales, and from 27,700 to 59,800 employees.
These companies contradict the image of '80s entrepreneurs as high-flying, highly leveraged risk takers who perhaps took one risk too many. Instead it suggests that the single most likely outcome for a company on the Inc. 500 list is that it will grow to become the kind of business that forms our country's economic foundation: a substantial privately held company that provides steady jobs and growth opportunities for its employees and is a loyal contributor to the local economy. For example, 10 years after it made the 1985 Inc. 500, Peter Deyager's Foreign Candy is still based in Hull, Iowa, and Deyager still scours candy stores the world over in search of interesting confections to adapt to the U.S. market. Despite the 1993 sale of the company's brand of gummy candy, Foreign Candy still has more than triple the revenues it had in 1984. And Jana Yeates is still selling temporary-help services in Manassas, Va. Her business, Temporary Solutions, has grown and spun off an employee-leasing company. The two companies have combined sales of $29.5 million, compared with sales of $1.5 million in 1985. The list goes on, but you get the picture.
Of course, looking only at that big picture obscures the painful details. Not all those companies have grown or thrived; about 14% of the 201 private companies that reported back to us saw revenues shrink over the decade. Many had ups and downs, caused by everything from divorces to declining markets. That those companies still, on the whole, grew so steadily is testimony to their founders' tenacity.
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The Acquirees
At least 135 companies on the list have been sold to new owners. The current status of those businesses is hard to gauge: it ranges from defunct to booming, from autonomous to completely subsumed. So we didn't attempt to get current statistics on their sales and employment. In most cases an acquisition represents a successful exit strategy for an entrepreneur and other stockholders. (We counted as failures companies that were acquired after they had filed for Chapter 11 protection.) And it's difficult to get good information about the sale of privately held companies. But we were easily able to determine that there is no dominant type of buyer: purchasers ranged from Fortune 500 corporations to other Inc. 500 companies to individuals. A surprising number of the 1985 Inc. 500 companies sold -- at least 14% -- were purchased by foreign buyers. The sale prices varied with company age and size. The most lucrative sale was probably the recent purchase of Legent (a company formed by a merger of equals involving #383 in 1985, Morino Associates) by Computer Associates International, for about $1.8 billion.
