Track 1 - Managing Transactions, Cash and Talent
Wednesday, 11/11, 2:00 p.m. - Beyond Cost Cutting: Strategies to Extend the "Cash Runway"
Moderator:
- Kate Barton, Americas Vice Chair – Tax Services, Ernst & Young
Panelists:
- Brooke Coburn, Managing Director, The Carlyle Group
- Dan Spiegelman, Former CFO, CV Therapeutics
- Anup Jacob, Partner, Virgin Green Fund
- Anders Gustafsson, Chief Executive Officer, Zebra Technologies
Companies need to continue to employ a combination of structural and creative fixes to raise cash as capital markets recover and the global economic recovery gains strength, a panel of fund managers and company strategists said at Ernst & Young's Strategic Growth Forum today.
Executives from The Carlyle Group, Virgin Green Fund, CV Therapeutics and Zebra Technologies shared strategies for extending the “cash runway” beyond typical cost-cutting measures. Those measures included consolidating functional areas such as finance and marketing, refinancing debt and outsourcing more business processes.
Most businesses reined in costs over the past 12 months. With the easy cuts behind them, leading companies have embraced more lasting changes to make their organizations more efficient and productive, and better able to seize market opportunities when the economy officially turns the corner.
“We addressed the structure of how we operate,” said Anders Gustafsson, chief executive officer of Zebra Technologies, an Illinois-based printer manufacturer. “It's not just squeezing costs because when you let up the pressure those costs always tend to creep back in.”
On top of outsourcing all of its manufacturing to China, Zebra implemented a new enterprise resource planning system, took out its first ever credit line, and used its strong cash position to repurchase 30 percent of its shares outstanding.
He and others on the panel also stressed investing in better analytics to improve their ability to forecast future shifts in demand and better manage inventory levels and working capital.
“We're spending a lot more time on sales pipelines because what is changed is customer behavior and you need to assess where the new normal is,” said Brooke Coburn, a managing director at The Carlyle Group who focuses on US-based biotech startups. “Most of our fund companies are now doing rolling monthly sales forecasts, along with scenario analysis. You need to have a plan. You can't wait until a 10 or 20 percent decline materializes.”
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