CFOs of private-equity-backed businesses in the UK are less optimistic about revenue growth than they were a year ago—and they appear increasingly poised to cut costs to stem losses, a new survey shows. Consternation over the economy appears to also be foiling plans for initial public offerings (IPOs).
A Deloitte survey of 70 UK CFOs, taken to assess priorities for the year ahead, showed that 54% of respondents were optimistic about revenue growth over the next 12 months, down from 70% a year ago.
The results, released Monday, also revealed shifts in strategies to deal with slower business. Revenue growth remains the top priority for CFOs in the next 12 months (40%). But 24% said protecting margins through cost-cutting was the top priority, up from 11% in 2011.
Meanwhile, market uncertainty was reflected by a decline in plans to exit a business—whether through a sale, buyout or public offering—during the next year. Only 4% expected an exit in the next 12 months, down from 18% in 2011. The biggest drop was in exits through an IPO. Only 4% this year see an IPO as an exit route, down from 17% last year.
“The results of the survey very much reflect current market sentiment, and we have seen a dip in the overall outlook for the coming months,” Emma Cox, lead partner for Deloitte’s private-equity-backed business team, said in a statement. “However, it is good to see that, despite the current recessionary woes blighting the UK and concerns around the euro zone, 54% of CFOs of private-equity-backed businesses are optimistic about revenue growth.”
Europe impact on US IPOs
The euro zone’s woes appear to be spreading to the US IPO market as well. Only 33% of capital markets executives at investment banks predict an increase in the number of IPOs on US exchanges during the remainder of 2012, according to a recent survey by consulting firm BDO. The rest are forecasting flat (36%) or negative growth (31%).
Renewed concerns with the European debt crisis and negative US economic data brought new offerings to a halt, Wendy Hambleton, a partner in the Capital Markets Practice of BDO USA, said in a statement.
“The capital markets community is clearly concerned that economic turmoil overseas will keep markets volatile, making for a challenging time to conduct initial offerings,” she said.
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—Jack Hagel (firstname.lastname@example.org) is the editorial director of CGMA Magazine.