Private equity-backed firms wary on growth prospects

Confidence among finance directors working for private equity-backed firms has slumped, according to new research.

A survey of 70 UK chief finance officers (CFOs) of such businesses conducted by Deloitte, the accountancy firm, found 54% were confident about revenue growth prospects compared with a year ago, when the figure was 70%.

Priorities among finance chiefs remain sales growth (40%), followed by the protection of margins (up from 11% in 2011 to 24% this year), the annual survey found.

Capital from their private equity backers is what features on most CFOs’ shopping list (51%), with ‘strategic input at board level’ (21%) and mergers and acquisition skills (14%) also featuring prominently.

Plans to exit a business in the coming 12 months have been hit by poor economic sentiment, with only 4% of respondents intending to sell up over the next year, compared with 18% at the same point in 2011.

Emma Cox, lead partner for Deloitte’s private equity-backed business team, said the results of the survey reflected current market sentiment and, with that, a dip in the overall outlook for the coming months. 

But despite the findings Cox tried to sound upbeat: “It is good to see that, despite the current recessionary woes blighting the UK and concerns around the eurozone, more than half of CFOs of private equity-backed businesses are optimistic about revenue growth over the next 12 months and a number of them remain focused on preparing the business for sale,” she added.

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