August 23, 2024 - Citrin Cooperman’s Private Company Performance Report found that private companies and their investors believe that more economic growth is imminent. There are many ways to take advantage of this growth opportunity now — is your business prepared to do so?
Economic growth opportunities
In the past year, value creation efforts that have contributed to private company economic growth spanned many activities from launching new products and services to engaging in mergers and acquisitions (M&A).
The most common value creation activities:
- Adding new products and services
- Extending operations to new territories
- Localizing business processes
- Outsourcing functions to third parties
Increased M&A activity
Positive economic growth indicates an anticipated steady increase in M&A activity in the latter half of 2024. Private equity firms and corporate buyers are expected to be a driving force behind the rise in M&A transactions, as they find themselves armed with capital reserves after a period of low M&A volume.
Organizations are poised to leverage M&A transactions as strategic tools to capitalize on emerging opportunities and strengthen their competitive positions by expanding their market presence and diversifying products or service offerings through strategic acquisitions.
We are seeing the uncertainties and risks that remain due to fluctuating interest rates and inflationary pressures being addressed through thorough due diligence processes, strategic tax planning, and mindful integration post-closing. Noticeably, sophisticated parties to a transaction are increasingly focused on the tax policies and regulations that can materially impact the economics and/or the feasibility of an M&A transaction.
Keys to future growth
The three biggest keys to future growth, according to private company leaders, closely mirror actions taken in the past year to create value. E-commerce tops the list of most important to growth, followed by new products, and entering new markets.
We suspect that the best of the best growth performers will do all three and more successfully in the coming months. As a side note regarding new products, 30% believe climate change initiatives will lead to significant new product and service opportunities.
Citrin Cooperman’s inaugural report covers comprehensive topics and aggregated responses from private companies across varied industries with a revenue size of under $10 million to over $1 billion. Access the full Private Company Performance Report for additional insights and commentary on the trends impacting private companies across the country.
