Irish private companies expect revenue growth to increase over next 12 months and almost half plan to increase headcount has been saved
Irish private companies expect revenue growth to increase over next 12 months and almost half plan to increase headcount
Over a third of Irish respondents expect revenue to rise by at least 51% over the next 12 months
85% of Irish private company leaders derive more than a quarter of their annual revenues from markets outside Ireland
Four in 10 private Irish companies in the survey believe they will participate in an acquisition over the next 12 months
Nearly half plan to increase their full-time headcount
A third of Irish respondents believe their company is on a path to going public within the next 12 months
7 May 2019 In a survey of 2,550 private company leaders across 30 countries, including 100 in Ireland, Deloitte found that the majority of respondents anticipate growth in six of eight key business metrics in the next 12 months. The strongest growth is predicted for revenue, productivity and profits.
With disruption rewriting traditional business operations, private business leaders are steadfast in their optimism about the year ahead. In its report on this important market segment, “Global perspectives for private companies: Agility in changing markets,” Deloitte details that over half of Irish private companies that responded to the survey expect revenue growth to increase over the next 12 months. Overall, three-quarters of private business leaders globally express high or extremely high confidence in the success of their private firm over the next 24 months.
Here in Ireland, despite 42% of respondents indicating that uncertainty is higher now compared to a year ago, over a third (35%) anticipate growth in revenue by at least 51% in the next 12 months. Overall, 65% of Irish respondents express high confidence in the success of their businesses for the next two years, with another 15 percent expressing very high confidence. A third believe that it is likely their business will go public in the next 12 months, while a further third believe this is likely after the next 12 months.
Daniel Murray, Partner, Deloitte Ireland said: “Despite some concern about trade policy and geopolitical uncertainty, with Brexit front of mind for many companies here, the majority of executives we surveyed are highly optimistic about growth and truly have confidence in their companies’ success in the year ahead. It is encouraging that private Irish companies have plans, and the ambition and confidence, to scale their businesses. These businesses are the engine of our economy, and their importance and contribution to employment and economic progress here is critical.”
Conducting business across borders
Regardless of business size or industry, technology has blurred borders and provides every company with the ability to be a global enterprise, and the survey findings demonstrate the importance Irish private companies place on conducting business across borders. In fact, 85% of Irish respondents derive more than a quarter of their current revenues from markets outside Ireland.
Broadly in line with overall global responses, four in 10 private Irish companies surveyed believe they will participate in an acquisition over the next 12 months. Another 28 percent in Ireland say their company will likely at least consider an acquisition.
Amongst all respondents, the top driver cited for M&A activity over the next 12 months is the opportunity to enter new global markets (39%). In Ireland, the main driver identified was increased availability of capital (35%), followed by the opportunity to enter new global markets (29%), bargain hunting for under-priced assets (29%), efficiencies of scale (26%) and to expand/diversify client base (26%).
Murray commented: “This potential expansion comes in the face of uncertainties ignited by global trade tensions, and of course Brexit closer to home. While 24% of global respondents view trade barriers as a significant risk to growth, it is not at the expense of private business’ optimism: 15% of respondents cite entry into foreign markets as their company’s main growth strategy over the next 12 months. In Ireland, that figure is even higher at 20%, which is again a reflection of the importance of international markets to businesses here.”
Talent as the differentiator
Despite advances in adoption and implementation of technology, private business leaders realise their employees can be the differentiator and are investing in them through the following initiatives: 39% of global respondents are devoting assets to training programmes, 35% are increasing their number of full-time employees and 33% are investing in leadership development.
In Ireland, increasing the number of full-time employees was identified by 49% of respondents as the top investment in talent, followed by leadership development (32%).
In order to attract and retain employees, 45% of Irish firms plan to reimagine learning and development programmes using experiential formats; four in 10 are driving a culture of open and transparent communication with leadership and promoting company commitment to social responsibility; and 36% are increasing their focus on flexibility and well-being programmes. Less than a third (32%) plan to develop new talent strategies, 9 percentage points below the global average.
Proactivity is catalysing productivity
Technology has brought businesses closer to their customers but it has also upended business models. It has driven efficiencies but also fostered uncertainties. To address these conditions, firms globally are not staying idle but considering (43%) and implementing (40%) new business models to navigate disruption. In Ireland, 45 percent of respondents are exploring ways to take advantage of disruption while 32 percent are considering new business models.
In conjunction with exploring new business models, companies are also looking for ways to improve growth. Globally, the top two strategies for firms are increased productivity (29%) and new product/service development (24%). The main growth strategies identified by Irish respondents are increased productivity (27%), growing existing markets (25%), development of new products and services (20%) and entry into new foreign markets (20%).
Social purpose fuels corporate profits
With the influence of social media and the rise of employee activism, the majority of private business executives recognise that having a strong company culture is not a “nice to have” but a “need to have.” In Ireland, in line with global respondents, more than three-quarters of respondents (77%) characterise culture as strategically important to the success of their company.
Culture encompasses much more than the activity happening within a business and private company leaders today recognise this new reality. Specifically, the concept of social responsibility is resonating with private firms worldwide, with 66 percent viewing it as a top or high priority for their organisation. To make the most of these initiatives, organisations are focusing on corporate strategy as well as employee and customer branding to separate themselves further from the competition.
Among Irish respondents, 62 percent say social responsibility is a high priority for their company; however, 31 percent say that their social responsibility programmes are not well developed or supported.
Issued by Murray on behalf of Deloitte
About the survey
From January 8 to February 7, 2019, a Deloitte survey conducted by OnResearch, a market research firm, polled 2,550 executives at mid-sized companies around the world about their expectations, experiences, and plans for becoming more competitive in the current economic environment. Respondents were limited to executives and senior managers at middle-market companies with annual revenues of between US$10 million and US$1 billion. In Ireland, there were 100 respondents.
Ninety-one percent of the companies represented were privately held; 9 percent were listed and traded on a public stock exchange. Among the private companies, 43 percent were private-equity owned, 17 percent were family-owned, 17 percent were closely held but not family-owned, 10 percent were venture-capital backed, and 4 percent were state-owned enterprises.
Sixty-one percent of the respondents were owners, board members, or C-suite executives; the remainder included vice-presidents, department or business line heads, or managers. A wide variety of industries was represented: those with the largest representation were consumer and industrial products; technology; media and communications; financial services; energy and resources; and life sciences and healthcare.
About Deloitte Private
Deloitte Private is exclusively focused on serving private clients of all sizes and driven to address the opportunities and challenges unique to private businesses. Deloitte Private delivers audit and assurance, tax, consulting and risk and financial advisory services tailored for private companies, including family-owned businesses, closely held (nonfamily) businesses and private equity and venture-capital backed businesses.
At Deloitte, we make an impact that matters for our clients, our people, our profession, and in the wider society by delivering the solutions and insights they need to address their most complex business challenges.
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In Ireland, Deloitte has approximately 3,000 people providing audit, tax, consulting, and corporate finance services to public and private clients spanning multiple industries. Our people have the leadership capabilities, experience and insight to collaborate with clients so they can move forward with confidence.
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