Riding the wave into 2015
As we dive headfirst into Q1, we are likely to see companies investing in additional resources, whether that be people, equipment, software or infrastructure. It’s the time of year when change is ripe, and with confidence on the rise, we’re poised for increased opportunities for growth and change as the door swings open to 2015.
Privately held U.S. companies are entering the New Year with strong profitability and healthy sales growth, according to Sageworks, a financial information company. “Over the past twelve months, private companies are growing sales at an annual rate of 8.6 percent. Private U.S. firms are also seeing their highest net profit margins in three years, at 6.6 percent.”
With increased sales comes the need for additional resources to support growth, enhance employee productivity and improve operations so deal flow can continue.
According to Ernst & Young (EY Divestitures), the dynamics that made 2014 a record year for U.S. deal making will continue into the new year, pointing to ongoing buoyancy for the M&A market in 2015. This trend is likely to stay on course as 81 percent of executives expect the deal market to improve in the next 12 months, while 41 percent of U.S. companies have five or more deals in their pipeline versus just 8 percent of companies six months ago.
This is good news on all fronts and sets the stage for confidently marching into 2015. For companies who want to take advantage of the positive trend, are in a growth mode, in need of upgrading their capabilities from the previous year, or have been involved in recent mergers or acquisitions, a variety of financing opportunities exist.
Commercial financing is available and accessible for every stage of growth and there are options depending on the company’s need for flexibility, cash reserves or liquidity. The following are some of the most common business expansion items that we see clients seeking to upgrade, replace or add.
- New technology, including computers and servers
- Cloud-based software
- Phone systems
- Office furniture
- Manufacturing equipment
Generally speaking business owners and operators have several options when it comes to financing capital expenditures, including:
- Use the businesses’ operating capital
- Seek bank financing
- Secure an operating lease or capital lease
Many organizations effectively use leasing to control cash flow management, keep working capital on hand and hedge against technological obsolescence. A financial statement (P&L and balance sheet) and a description of the desired equipment, technology or other resource are two of the key pieces needed to begin the commercial finance process.
It’s the perfect time of year for business owners and execs to re-evaluate their current structure and plan for the growth that lies ahead. Making necessary business improvements or taking a leap to the next level through new technology, equipment or systems can reinvigorate the entire organization and pave the path for success in the New Year.