I am head of the corporate and business law group at Meltzer, Lippe, Goldstein & Breitstone, LLP, a prominent Long Island law firm. Also, for the past 15 years I have been General Counsel of LISTnet. At Meltzer, Lippe, we have handled a regular flow of purchases and, even more sales of businesses on Long Island. Throughout all of the transactions that I have been a part of, I have noted the unique nature of the sale of technology-related companies. Unlike purchasers of companies in various fields such as manufacturing, distribution, or service who tend to consolidate and move their operations to cheaper geographic areas of the country, technology related companies have the propensity to remain on Long Island.
The high costs of rent, utilities, employee-related expenses and frankly, all operations on Long Island, drive buyers’ desires to leave here. For example, I recently completed an $80,000,000 dollar sale of a manufacturing and distribution business to a large European public company. In an effort to keep the employees’ jobs, we negotiated a lease with the buyer to keep the company on Long Island for a period of three years, at a rent in excess of $200,000 per year. Mid-way through the lease, the buyer informed our client that they had decided to move all operations to Tennessee and would continue to pay the rent for the remainder of the lease term. This move not only shows the willingness of a buyer to leave Long Island in the face of having to continue to pay close to $300,0000 over the remaining life of the lease plus the significant costs of relocation and hiring of an entirely new workforce, but the confidence the buyer had in its ability to find similarly skilled workers for less money elsewhere in the United States. Sadly, I continue to see this trend of companies consolidating their operations off of Long Island primarily because of cheaper alternatives elsewhere.
In contrast to the above, many of the technology-related companies for which I have facilitated the sale, have remained on Long Island following the transaction. In fact, I have noticed a reversal of the trend described above, wherein after a transaction, many times the purchaser will consolidate operations from elsewhere in the United States to Long Island. This reversal is due to the availability of well educated and highly skilled technology-related employees on Long Island. This goes back to the days when defense was a major industry on Long Island. Grumman, Sperry, BAE Systems, AIL/Eaton, General Instrument and many others were major employers of engineers and other highly-skilled labor at well-paying jobs. When these companies and jobs left Long Island, the benefits of living here that we all enjoy kept many of these employees and their families here.
Evidence of this can be seen by the large number of software and other technology-related businesses based here. These companies’ employees tend to have more knowledge, skills, qualifications and certifications than elsewhere in the United States. Buyers of these technology companies realize the value of better educated and skilled labor and are willing to pay the price for it.
The need for and availability of this workforce can make the difference between a buyer keeping a company on Long Island or its moving it to a less financially burdensome geographic area of the country. The Long Island technology sector has achieved something that most other companies have been unable to accomplish; convincing buyers from elsewhere that they should not leave Long Island. Bravo!