PricewaterhouseCoopers' Trendsetter Barometer interviewed
CEOs of 340 privately held product and service companies identified in the
media as the fastest growing U.S. businesses over the last five years.
The surveyed companies range in size from approximately $5 million to
$150 million in revenue/sales.
NEW YORK, Nov. 21, 2005 (PRIMEZONE) -- Despite rising interest rates, a segment of super-fast-growth companies completed new bank loans in the third quarter. Hungry for capital, these new borrowers also expect to explore non-traditional financing over the next 12 months.
Need for expansion capital trumps cost.
Despite steadily increasing interest rates, 17 percent of the nation's fast-growth companies completed new bank loans in the third quarter, consistent with 16 percent in the second quarter.
Due to recent increases by the Fed, the mean interest rate paid by these companies was reported to be 6.74 percent-up 46 basis points from the prior quarter, and 142 from a year ago.
New borrowers are expecting much stronger revenue growth over the next 12 months than non-borrowers-a 30.6 percent increase versus 22.2 percent for all others, or 38 percent higher.
To fuel their expansion, more new borrowers than non-borrowers expect to make major new investments of capital over the next 12 months: 66 percent versus 46 percent, respectively. And, new borrowers are also more likely to have increased their budgeting for new products (44 percent versus 37 percent for non-borrowers) facilities expansion (32 percent versus 24 percent); geographic expansion (39 percent versus 30 percent); and business acquisitions (27 percent versus 17 percent).
"New borrowers are on a super-fast track, and cannot support their ambitious growth plans from cash flow alone," said Tracy Lefteroff, PricewaterhouseCoopers' global managing partner of private equity and venture capital. "Because of their critical need for capital, they are not put off by what may appear to be a modest quarter-to-quarter increase in its cost."
More Borrowers to also Explore Non-Traditional Financing. Thirty-one percent of 3Q 2005 borrowers expect to also explore non-bank financing options over the next 12 months-up slightly from 28 percent in the prior quarter. In contrast, only 19 percent of non-borrowers plan to go this route (off from 23 percent).
Borrowers Non-Borrowers
-- Venture capital 17% 7%
-- Private placement 15% 8%
-- "Angel" investors 10% 12%
-- IPO 5% 1%
-- Net Total 31% 19%
"There's a healthy supply of venture capital out there for companies with a good deal and a good plan," said Lefteroff. "This is an excellent time to explore financing options."
PricewaterhouseCoopers' "Trendsetter Barometer" is developed and compiled with assistance from the opinion and economic research firm of BSI Global Research, Inc.
PricewaterhouseCoopers (www.pwc.com) provides industry-focused assurance, tax and advisory services to build public trust and enhance value for its clients and their stakeholders. More than 130,000 people in 148 countries work collaboratively using connected thinking to develop fresh perspectives and practical advice.
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If you have a question about this "Trendsetter Barometer" survey, please contact Pete Collins, survey director and publisher, at 646-471-4496 or e-mail to: pete.collins@us.pwc.com
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