Surviving and Growing Your Business In An Economic Recession

June 29, 2009 - PRLog -- A downturn in the economy presents a unique opportunity for companies to take over market share in their respective industries.  While almost all companies are experiencing reductions in revenues in 2009 compared to 2008 year-to-date, some are positioned well to acquire assets, intellectual property, human resources or under-performing companies.  Strong companies are exploiting the opportunity to take customers from struggling and failing competitors, and they are positioned to do so because they have followed a few simple but very important principles.

The key principles to surviving and growing your company during an economic recession include: reduce  costs early, focus on your core business disposing of any non-core assets, over-deliver to your customer creating stronger loyalty, and make strategic acquisitions of companies, capital assets, &/or personnel.  The 80/20 rule applies in almost every business, where 80 percent of all business comes from only 20 percent of the customer base.  Economic recessions require a focus on customer retention, then new customer acquisitions.

According to an eight-year study by a world-wide business consulting firm, Bain & Company, approximately 24 percent more firms moved from the bottom of their respective markets to the top during the 2001 recession compared with the subsequent period of economic growth.  This study analyzed the net profit margins and sales growth of more than 2,500 companies, and it proves that economic recessions are a great opportunity for market penetration.  If expenses are managed properly during these times of expansion, any improvement in the economy will bring increased profit margins and a far greater cash flow and ultimately overall value of the company.

As company values increase, what can business owners expect when planning exit strategies in today’s mergers & acquisitions marketplace?  If you read about M&A on WallStreet right now, the news is all doom and gloom.  It’s true that M&A volume is down significantly.  Comparing figures through the first quarter of 2009, deals worth more than $1 Billion were down more than 50 percent.  However, deals worth under $100 million are only down 33 percent.  The fact is, there are still good deals going on and most of them are on the lower end of the middle-market ($100MM deals and under).

S&P Capital is taking a new business to market in July 2009.  In an M&A market that many are calling depressed, S&P Capital is taking a business to market seeking buyers or investors looking to participate in a recapitalization.  The family members that own this company that was started over 80 years ago feel that right now is an opportune time to seek out potential investors/buyers for their business, as they start to plan their eventual retirements.  They feel that the depressed supply of businesses available to acquire, coupled with the incredibly high buyer demand that still exists despite suffering capital markets, creates a perfect storm for selling equity in a good business.  Plus, they realize that exit strategies can sometimes take in excess of 5-7 years to fully implement.  Educated business owners with the foresight to sit down and plan early with investment banking professionals like those at S&P Capital, benefit in an eventual sale with higher sales prices and more attractive terms.

About S&P Capital:

S&P Capital offers M&A advisory services to privately-held middle market companies.  S&P Capital represents sellers on transactions ranging from $1 million to $50 million, selling all or a majority of the company to private equity groups, strategic buyers or private investors.  Headquartered in Charlotte, North Carolina, S&P Capital focuses primarily on companies in the Carolinas and Southeastern United States.  The principals of S&P Capital have been executing M&A transactions for more than a decade.  For more information, visit www.sandpcap.com.

Contact Information:

S&P Capital
210 N. Church St. #2515
Charlotte, NC 28202
(704) 897-0552

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S&P Capital is a North Carolina firm offering investment banking services for mergers and acquisitions. We take pride in our ability to deliver highly sophisticated corporate finance services to privately held companies that are not large enough to be served by Wall Street.