In this poll we have spoken to 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 July - December 2010.
Results:
1. What is the outlook for your business over the next 6 months?
| Extremely positive | 16% |
| Positive | 52% |
| Neutral | 20 |
| Concerned | 12% |
| Extremely concerned | 0% |
2. What do you think is your greatest opportunity for 2010?
| Market consolidation | 36% |
| New product development | 12% |
| Cost reduction | 4% |
| Government assistance | 0% |
| Export | 20% |
| Other | 28% |
3. What concerns you most in 2010?
| Debt levels | 0% |
| Banking relationships and additional funding | 12% |
| Global economic outlook | 36% |
| Retaining and attracting key people | 12% |
| General market conditions | 20% |
| Other | 20% |
4. Will you be increasing / decreasing / keeping constant your staff numbers in 2010?
| Increasing | 60% |
| Decreasing | 0% |
| Static | 40% |
5. Will you be concentrating on investing in your business or reducing costs in 2010 or a hybrid of both?
| Investing in business | 52% |
| Reducing costs | 4% |
| Hybrid of both | 44% |
6. Since the beginning of 2010 has your target exit date been advanced, deferred or remained constant?
| Advanced | 16% |
| Deferred | 12% |
| Constant | 72% |
7. When are you targeting your exit?
| Within 12 months | 24% |
| 1 - 2 years | 28% |
| 2 - 3 years | 36% |
| 3 - 5 years | 8% |
| 5 + years | 4% |
8. Would you recommend a PE backed opportunity?
| Yes | 92% |
| No | 4% |
| Unsure | 4% |
9. Has running a PE backed company lived up to your initial expectation?
| Completely | 44% |
| Partially | 32% |
| Minimally | 8% |
| Not at all | 16% |
10. How would you rate your relationship with your Private Equity Partner?
| Strong | 76% |
| Encouraging | 16% |
| Neutral | 4% |
| Discouraging | 4% |
| Weak | 0% |
11. How would you rate your relationship with your bank?
| Strong | 68% |
| Encouraging | 24% |
| Neutral | 4% |
| Discouraging | 0% |
| Weak | 4% |
Comparisons to January's poll and points of interest:
- Outlook for the next 6 months was generally positive, relative to the preceding 12 months, and consistent with our previous poll.
- Global economic outlook was by far the greatest concern (36 %) over the next 6 months. A number of CEO’s polled felt that their businesses had been adversely affected by the volatility of the exchange rate and were hopeful that there would be a return to less volatility over the next 6 months.
- Many CEO’s felt their greatest opportunity for growth would come from market consolidation as a result of the pressures over the last year reducing the competitor base and creating potential acquisition opportunities. A number of participants felt that export opportunities would also create sales growth. CEO’s generally felt that growth rates over the next six months although better than the previous 6, will still remain relatively low.
- This poll recorded a significant increase in participants planning to increase investment in the business (52% cf 29%) This investment was evenly allocated between growth capital and increased efficiency measures to reduce costs. Retail participants believed that the current property market represented opportunities to secure property at favorable terms.
- CEO’s intending to increase staff have risen significantly (60% cf 42%). None of the CEO’s who participated in the poll intended to reduce staff. The majority of new hires were field sales, front desk and blue collar.
- Exit dates remain constant for the vast majority (72 % cf 47%) with most occurring in the next 2 – 3 years.
- Private equity remains an attractive career opportunity for the CEO’s polled with 92% endorsing private equity. This is interesting when you consider that only 44 % believing their experience with private equity has completely lived up to their initial expectations. Even those CEO’s polled who felt the opportunity had been poor (24%) with respect to their initial expectation would endorse private equity and remained positive about their relationship with their PE partner.
Please feel free to contact Nick Tunbridge, should you have any questions regarding the poll. Our next poll date will be Jan 2011 and will relate to expectations regarding the first half of the calendar year.
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.