How Has the Economic Downturn Affected You?
The economic downtown had an adverse effect on each of the client companies surveyed.
What Do You Foresee in the Next 18 Months?
Virtually every company surveyed expects modest growth, but growth nonetheless, over the next 18 months.
As indicated by the comments above, most companies are expecting a modest recovery from a micro- and/or macro-economic perspective; however, slow growth rates are anticipated by most companies for the balance of 2010 and into 2011. Survey respondents expect neither a V-shaped recovery, nor a material near-term drop in unemployment.
A Duke University / CFO Magazine Global Business Outlook Survey asked 1,102 CFOs from a wide range of companies about their economic expectations. In the survey, CFOs of U.S. based companies indicated that 59% of domestic companies do not expect employment to return to pre-recession levels until 2012 or later. Further, one-fourth of domestic companies violated or almost violated a covenant on their credit lines. The top macroeconomic concerns for U.S. businesses are (1) consumer demand and (2) the federal government’s agenda/policies, while the top internal (firm-specific) concern is maintaining profit margins.
Another client provided the following commentary, which summarizes several key aspects of the economic downturn and how companies are operating in its wake:
The economic downturn adversely affected companies in virtually all industries. Shrinking demand in tandem with excess leverage caused many businesses to close their doors. For many surviving companies, the silver lining of such adversity is that management is now better able to efficiently allocate labor and capital, operations are running leaner, employee productivity is generally higher, and market share is there for the taking.
At Mercer Capital, we interact with a large number of client companies operating in many industries. We understand that the economic downturn has not only affected certain industries in unique ways, but also companies within each industry have unique perspectives of the downturn and (cross your fingers) near-term recovery.
What has not changed is the need for sound and reasonable valuation analyses from a trusted advisor. When the need for valuation services arises, please call us at 901.685.2120 to discuss the matter in confidence.