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PwC: US survey finds US-based international private companies more aggressive
January 23, 2013
By Rob Starr, Content Manager, Big4.com
PwC US’s Private Company Trendsetter Barometer survey found that in the fourth quarter of 2012, privately held businesses selling internationally, especially those in emerging markets, forecast higher growth rates than private companies that sell solely in the United States.
“We see uncertainty about the fiscal cliff clearly reflected in domestic-only private companies’ outlook in the fourth quarter,” says Ken Esch, a partner with PwC’s Private Company Services practice. “Despite the legislation passed at the beginning of the year, many of the private companies we work with continue to feel uncertain. There’s a sense among them that Congress is not beyond spending cuts and taxes that could impact their businesses further.”
Unsurprisingly, optimism levels for the US and global economies remained muted in the fourth quarter. Just one out of four (25 percent) international private companies said they were optimistic about the global economy, similar to a year ago (24 percent). Private-company optimism about the US economy showed little change at 42 percent, compared with 44 percent in the previous quarter and 39 percent a year ago. Almost as many Trendsetter companies were uncertain about the US economy (40%) as they were optimistic.
More than two-thirds (67%) of Trendsetter companies plan to increase their operational spending over the next 12 months. International private companies, especially the 48 percent selling in the emerging markets of China, India and Brazil, remain well ahead of their domestic-only peers in this regard. More than three-quarters (79 percent) of Trendsetter companies operating in China, India and Brazil plan to increase operational spending, compared with 74 percent of international companies overall, and 61 percent of domestic-only companies.
“Much as they dislike ongoing uncertainty, private companies have been operating in this environment for several years now,” says Esch. “They fully understand that they can’t table growth initiatives indefinitely while they wait for greater certainty about the US economy and fiscal policy. As a result, we’ve seen many private companies turn to fast-growth markets abroad in an effort to buffer weakened demand and uncertainty at home. International Trendsetter companies expect to outperform the overall economy, and they consistently show they’re willing to spend more to drive growth.”