Posted: February 03, 2010
The Rocky Road to Recovery
Association for Corporate Growth Special Section
By GRANT RUESCH
As we look forward to the 2010 Rocky Mountain Corporate Growth Conference in March, the famous phrase coined by Clinton campaign strategist James Carville, - “It’s the economy, stupid” - seems more apropos than ever.
Over the past two years, the global economy has experienced the most vexing confluence of economic problems at any time since the end of World War II. The U.S. economy - both Main Street and the financial system - remain under severe stress, as does most of the world. The long-term impact on U.S. households and the business environment is predicted by most economists, government officials and business leaders to be profound. We chose the conference theme, Managing Beyond the Recovery - New Realities, New Rules, New Values, carefully to reflect the coming change.
New Realities, New Rules and New Values will shape the new normal. Beyond the recovery, economists and business leaders alike envision a lower-growth U.S. economy, higher structural unemployment, labor shortages, a weaker dollar, rising public spending, higher taxes, a more skeptical and less trusting investor community, and a higher rate of inflation than what existed during the several decades leading up to the Great Recession.
A COMPELLING DIALOGUE FOR ACG MEMBERS
Just as the conference theme was carefully chosen, so were the six panel-session topics that will be featured in the two-day conference:
The Changing Landscape of Middle Market Investment will assess the climate for deal making in the middle market. It will address the question of how soon we will see a resurgence of deal making as the economy improves and the middle market mergers-and-acquisitions cycle pulls out of the current slump.
How Expectations Have Changed in a Buyer’s Market for Professional Services will explore how the role of the professional services provider and the perception of professional services is changing in the face of a steady stream of pressures including the demand for greater virtual access by clients, a belt-tightening mentality, more sophisticated clients, the adoption of social networking and the commoditization of services.
Crossing to Safety: Prepping for Success will delve into how certain companies have continued to grow, with loyal customers and engaged and productive employees, despite some tough challenges in managing the bottom line. Panelists will explore what these companies are doing that can be adopted as best practices for achieving high levels of employee satisfaction and empowerment. It will address the importance of instilling a strong sense of vision, mission and values into their work force.
C-Suite: Evolution to a More Interdependent Team will take the pulse on what’s really happening in the C-Suite. You’ll get firsthand insight into emerging new forms of collaboration and interdependency within the executive management group. We will examine whether tough economic times have cultivated a new mindset toward crossover collaboration between functional areas, as opposed to functional disciplines that have traditionally operated as silos below the level of the CEO. We will also address the question of whether the decision-making process is becoming more collaborative and the thinking behind decision-making more integrated.
Making the Most of Business Valuation explores the impact of lower valuations during the economic contraction. Panelists will address actions that business owners have taken in the face of lower valuations - whether it’s lowering prices, restructuring terms and conditions of sale such as seller paper and earn-outs to bridge the valuation gap, or reinvesting in the business and postponing the sale to build value for the longer term.
CEO Retrospective: What Tested Your Mettle During the Recession is an up-close-and-personal examination of how some CEOs managed their companies through the longest and most turbulent economic downturn since the Great Depression. You’ll get insight about the hard-nosed, straightforward and objective actions that CEOs take in response to revenue and profitability shortfalls such as managing cost structures and adjusting business strategies. You’ll also see what tested their mettle as leaders in terms of bolstering employee morale, wearing a brave face, dealing with uncertainty, keeping their emotions in check and maintaining needed balance in their personal lives.
A COMPELLING CHALLENGE FOR AMERICA
The U.S. economy, including our financial markets, is at a unique point in history. All at once we have concerns and questions about bedrock issues that are pivotal to the future of American Enterprise. In recent meetings with business leaders throughout the Denver Metro area, one is struck with the consistency of top concerns being expressed and the strong focus on questions to which there are no clear answers. Here are some of the concerns and questions being posed as business leaders contemplate the intermediate-term future:
• The strong belief that the only recovery that is durable and that will increase our long-term standard of living is the one led by private demand.
• The concern that efforts by governments and central banks to stoke economic recovery through low interest rates and stimulus spending will once again create asset-price bubbles in real estate, stock and currency markets.
• Whether it would be wise to concentrate more “super regulator” power in the Federal Reserve, which itself has at times contributed to economic instability - such as keeping the federal funds rate too low for too long under the Greenspan era, thus spawning the housing boom.
• Skepticism as to whether the Federal Reserve really knows the right time to start mopping up excess liquidity ($1 trillion in excess reserves has been added to the system) so as not to stall the recovery but also not to trigger inflation.
• How America can begin working with other nations to re-balance international trade and global growth so it is less dependent upon U.S. consumers.
• Whether, because of de-leveraging, outsourcing and technological advances in a services-dominated U.S. economy, the structure of the business cycle has changed such that it no longer operates as it once did to replenish the jobs that were lost during the downturn. Do we even have the right tools to manage business cycles?
There is no question not all businesses have been impacted the same way over the past two years. Great results are being reported across a number of companies in such industries as broadband provisioning, data storage, outsourcing and health-related services, many of which have seen strong top-line growth and sustained profitability. At the same time, many companies comprising the retail, hospitality, auto and leisure and recreational sectors have been hammered badly. Certainly, the environment for startup companies has been rather challenging due to the tight rein on venture capital funding. Tighter money has meant that only the strongest business concepts have been funded.
We look forward to the March conference, which will bring together the broad base of ACG constituents - operating company executives, leaders of professional services and investment firms, private equity deal makers and intermediaries - to relate their experiences and share ideas about how enlightened business management, innovation, deal making and venture capital investing can build new momentum during and beyond the recovery.
Grant Ruesch is the owner of DGR Consulting, and he is the co-chair of the 2010 Rocky Mountain Corporate Growth Conference