Touchstone private equity portfolio CEO where we have polled CEOs who are running companies that have private equity ownership. The poll provides their opinion as to the outlook for their business for the period January - June 2010.
Poll Results
1. What is your outlook for your business in 2010?
| Extremely positive | 16% |
| Positive | 54% |
| Neutral | 17% |
| Concerned | 10% |
| Extremely concerned | 3% |
2. What do you think is your greatest opportunity for 2010?
| Market consolidation | 34% |
| New Product Development | 16% |
| Cost Reduction | 13% |
| Government Assistance | 3% |
| Export | 12% |
| Other | 22% |
3. What concerns you most in 2010?
| Debt levels | 20% |
| Banking relationships and additional funding | 10% |
| Global Economic Outlook | 8% |
| Retaining and attracting key people | 12% |
| General market conditions | 46% |
| Other | 4% |
4. Will you be increasing / decreasing / keeping constant your staff numbers in 2010?
| Increasing | 42% |
| Decreasing | 5% |
| Static | 53% |
5. Will you be concentrating on investing in your business or reducing costs in 2010 or a hybrid of both?
| Investing in business | 29% |
| Reducing costs | 16% |
| Hybrid of both | 55% |
6. Since the beginning of 2009 has your target exit date been advanced, deferred or remained constant?
| Advanced | 20% |
| Deferred | 33% |
| Constant | 47% |
7. When are you targeting your exit?
| Within 12 months | 8% |
| 1 - 2 years | 16% |
| 2 - 3 years | 37% |
| 3 - 5 years | 29% |
| 5 + years | 10% |
8. What attracted you to Private Equity?
| Wealth Creation | 41% |
| Career | 25% |
| Other | 34% |
9. Has running a PE backed company lived up to your initial expectation?
| Completely | 45% |
| Partially | 37% |
| Minimally | 10% |
| Not at all | 8% |
10. How would you rate your relationship with your Private Equity Partner?
| Strong | 82% |
| Encouraging | 10% |
| Neutral | 8% |
| Discouraging | 0% |
| Weak | 0% |
11. How would you rate your relationship with your bank?
| Strong | 45% |
| Encouraging | 23% |
| Neutral | 16% |
| Discouraging | 8% |
| Weak | 8% |
- Points of interest:
The overwhelming take out was the strong relationship that nearly all the CEOs had with their respective PE partners. The CEOs felt the relationship was the strongest when they were left to run the business. This autonomy was also one of the greatest initial triggers along with wealth creation, attracting them to a PE opportunity. - When asked what could be done to strengthen the relationship, key messages were the provision of more detailed and regular communication to enable better alignment on the proposed exit. In addition, CEOs felt that decisions were often made based on short term financial outcomes rather than for the longer term benefit of the industry. Nearly all the CEOs polled believed the more knowledgeable the PE house was about the industry the portfolio company operating within the better.
- Although the overwhelming response regarding the outlook for the six months is optimistic, there remains considerable caution, this being reflected in the greatest cause of concern for the period being general market conditions.
- Across all industries the greatest opportunities in the next six months will be as a result of market consolidation together with a gradual return to previous revenue levels.
- Less than 10 % of polled CEOs intend to reduce staff.
- 85% of CEOs intend to increase working capital.
- A high number of exit dates that had been targeted within the next 12 months have been deferred. 25% of exit dates scheduled for 3 years plus have been advanced.
- Most common period for exiting across the polled portfolios is 2012 – 2013
- 45 % had said that being involved with PE had completely lived up to initial expectations while 35% said that being involved with PE had only partially delivered. The remaining 20 % were evenly split between minimal and no delivery on expectation. This was largely due to economic factors.
- Overall relationships with the bank providing debt were positive with 45% describing the relationship as strong while 16 % saw the relationship as discouraging or weak.
Please feel free to contact Nick Tunbridge, should you have any questions regarding the poll. PleOur next poll date will be June 2010 and will relate to expectations regarding the second half of the calendar year, July - December 2010
Touchstone specialises in senior executive search in the top tiers of leadership and has a dedicated private equity portfolio company practice. Positions we typically source are Chief Executive Officer, Managing Director, Head of Sales, Head of Finance/CFO, Head of Operations, Chief Operating Officer.
Touchstone wishes you the best for the remainder of 2009 and we look forward to working with you and supporting your business throughout 2010