As confidence returns, be bold to seize first-mover advantage.
Cautious optimism is the overriding mood in our latest Global Capital Confidence Barometer. This survey of global executives identifies how companies are managing their capital agenda.
CFOs must help seize first-mover advantage
The economic crisis has been long and drawn out. The mood of cautious optimism is understandable. However, the outlook is improving and credit availability is high. The challenge for the CFO is to help realize the potential and ensure that the risk aversion that has become so pervasive does not lead to stagnation. Those who seize first-mover advantage have the opportunity to attain sustained market leadership.
Good governance must be balanced with a suitable risk appetite
The main areas of focus in the boardroom have been on efficiency, cost control, risk management, capital allocation, regulatory issues, investor relations and corporate governance. All of these agenda items, which were cited by half or more of our respondents, point toward companies building greater stakeholder accountability.
While they are all essential for running a strong organization in today’s environment, the CFO must balance the need for good governance with the imperative for growth.
Revisit your M&A strategy before valuations take off
With 44% of respondents expecting M&A assets to increase in value over the next 12 months (and only 7% calling for a decrease), companies should consider taking advantage of this inflection point now.
If there are acquisitions that can drive growth for your organization, now is the time to act before prices rise. CFOs must help develop the strategy that enables their organizations to identify and validate the right opportunities to drive growth.
Capitalize on improved credit conditions
Most companies in the Barometer are using cash as their primary source of deal financing over the next 12 months, with less than one-third saying they plan to use debt.
This is without doubt an enduring effect of the financial crisis, when many companies came to perceive credit as a liability. But at a time of ample credit availability and historically low pricing, leading companies are once again coming to view credit as an important tool to fuel their growth agenda.