Although wealth private investors (business angels) usually stick to the small end of town, they do work with medium-sized and large companies at times when bank finance is expensive. Typically, angels can fairly quickly assess a company and provide a loan. This sometimes comes with a provision that it converts to equity if payments are not made as agreed (so it can be expensive). Any private deal is going to be is slower than a bank, however, so leading companies are already taking out wealthy private investors for coffee and lunch to sound out future possibilities.
If the economic uncertainty coagulates into a second crisis, leading companies will know precisely the value of their assets. This is crucial to scenario planning – a sustained downturn might mean changing business strategy and reducing or cutting some operations. Part of the decision will hinge on the quality of the assets involved in each business division; some might be better sold and the proceeds reinvested in core operations.
While the markets are down and the dollar high, now is the time to buy rivals, swoop on ailing competitors’ markets, acquire staff in weaker labour market conditions, ready new products or service for market, and buy essential plant and equipment from overseas suppliers.
In the first quarter, CFOs told Deloitte they felt optimistic, and were poised for an upturn. Whether or not this has changed, an upturn will eventually come. Picking the moment to unleash pent up growth, investment, advertising and marketing is what sets leading companies apart from the others.
Kath Walters is the editor of LeadingCompany and an award-winning journalist of 15 years’ experience. Kath was previously a senior writer and editor at BRW magazine covering management, strategy, finance, entrepreneurship and venture capital across all industry sectors. In 2006, Kath won the Citibank Award for Excellence in Journalism (General Business). Follow her on Twitter @KathWalters
This article first appeared on LeadingCompany.
Andrew Sadauskas is a former journalist at SmartCompany and a former editor of TechCompany.
