Confidence is returning, and this trend is echoed by the increase in equity forming part of the purchase consideration, with 29% of Australasian respondents stating it was their preference.
The economic climate is looking bright with 53% of Australasian respondents saying capital market conditions continue to improve and 40% acknowledge access to funding for capital projects is not a problem.
Keeping an eye on the money
Balance sheet leverage remains low: only 8% of Australasian respondents have a debt to capital ratio above 50%; 69% are below 25%.
| 29% |  | Confidence is returning, and this trend is echoed by the increase in equity forming part of the purchase consideration, with 29% of Australasian respondents stating it was their preference. |
Australasia: compared with 6 months ago how have credit/capital conditions changed for your company?
The story is a little different for mid caps and smaller businesses
38% of Australasian respondents still need to refinance — the majority of them smaller sized businesses with annual global revenues from US$500 to $999.9m. The biggest refinancing issue is the lack of available debt and lack of viable alternatives to debt with 32% and 27% respectively saying it was the most confronting challenge.
What is your biggest challenge in refinancing?
Bank loans as a preferred source of funding has decreased this year. Given the lack of inorganic investment opportunity, larger corporates are using cash to pay down debt or are accessing the bond markets to diversify their funding sources and extend the duration of their facilities. Smaller businesses concerned about their viability and increasing interest rates are also paying down debt where possible.
Consequently, it was no surprise that cash flow and liquidity are now the priority focus over the next 12 months, with 56% of Australasian respondents saying it was the number one business aspect that would receive increased attention.
Australasia: what will be your main source of deal financing in the next 6-12 months?
This focus on cash reflects an increasing trend from April 2010 and clearly demonstrates that many small businesses are still facing significant issues in the preserving phase of their capital agenda. The inability to access debt and equity is forcing respondents to focus internally on how they generate more cash and meet liquidity demands.
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