PwC’s Private Company Trendsetter Barometer tracks the business issues and best practices of privately held US growth businesses. This quarter’s report incorporates the views of 201 chief executive officers (CEOs/CFOs): 114 from companies in the product sector and 87 in the service sector, averaging $272 million in enterprise revenue/sales, and including large, $500M-plus private companies.
PwC US’s Private Company Trendsetter Barometer survey found that in the fourth quarter of 2012, privately held businesses selling internationally, especially those in emerging markets, forecast higher growth rates than private companies that sell solely in the United States.
The projected growth rate for these international Trendsetter companies rose to 9.3 percent (up from the third quarter’s 8.5 percent). Private companies selling in the key emerging markets of China,India, and Brazil forecasted an even higher 9.7 growth rate for the next 12 months.
Private Companies Continue Spending; Bank Loan Activity Picks Up
More than two-thirds (67%) of Trendsetter companies plan to increase their operational spending over the next 12 months. International private companies, especially the 48 percent selling in the emerging markets of China, India and Brazil, remain well ahead of their domestic-only peers in this regard. More than three-quarters (79 percent) of Trendsetter companies operating in China, India and Brazil plan to increase operational spending, compared with 74 percent of international companies overall, and 61 percent of domestic-only companies.
Information technology continues to rank at the top of the list of spending areas for Trendsetter companies overall (reported by 28 percent), though fewer companies plan to increase their IT spending compared with those reporting that intention a year ago (40 percent).
International private companies also lead their peers in planned major capital investments over the next 12 months: 47 percent of international companies operating in emerging markets are planning to invest in major capital projects, versus 42 percent of international companies overall and 27 percent of domestic companies.
As private companies continue to plan increases in their operational spending plans, they’re also increasing their banking activity, with 14 percent of private companies reporting financing activity in the fourth quarter of 2012 (up three points from the previous quarter). Twelve percent reported new bank loans, with the mean interest rate paid on loans by these companies hitting a low of 3.46 percent, 44 basis points below a year ago (3.90 percent).
“Private companies are taking advantage of improved balance sheets and interest rates to take on additional debt and re-invest in their business,” says Esch. “International private companies, especially, are taking a more aggressive approach to future growth. Businesses that take calculated risks now should be better poised to seize opportunities when the economy turns the next corner.”
More Hiring Underway; Planned Increase in Composite Workforce Reaches Highest Level Since Pre-Recession
The majority of private companies (56 percent) are planning net new hiring over the next 12 months, up one point from the previous quarter and two points higher than a year ago. A notable uptick is planned in the number of new hires — Trendsetter companies’ average composite workforce is expected to grow by 2.8 percent over the next year, up from 1.6 percent forecast in the prior quarter. This is the highest planned increase in the panel’s average composite workforce since the third quarter of 2008, when it was 3.6 percent.
“As private companies expand their operations, growing their workforce will be crucial to continuity of service,” says Esch. “As reported in previous surveys, finding the right talent can be challenging, so strategic planning in this area, in terms of employee development and maintaining a pipeline of candidates, is key to businesses’ scalability and resilience.”
Source: Excerpts from PwC US Release