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Private Company Execs Optimistic They Will Outperform Broader Economy

June 21, 2013, 06:57 AM
Filed Under: Economic Commentary
Related: KPMG, Private Company

Private company business leaders predict that their companies’ performance will continue to outpace the broader U.S. economy in 2013, as they look to IT investments and new products to drive their future growth, according to a survey by KPMG LLP, the U.S audit, tax and advisory firm.

Although current estimates place U.S. growth in 2013 at no more than 2.5 percent, a majority  – 58 percent – of respondents to the KPMG survey say their companies are poised for growth of 6 percent or greater this year, with 15 percent reporting growth will range from 11 – 20 percent and 10 percent saying they expect growth greater than 20 percent. 

However, survey respondents also report that the nation’s current regulatory environment is putting pressure on their companies’ growth, expansion plans, and hiring. More than half (57 percent) of those surveyed report that federal regulatory changes have had a negative impact on their businesses, and higher taxes and uncertainty about tax reform have impeded private company job creation and growth and prevented additional investment in otherwise growing businesses.

“It’s clear that many of the private companies we surveyed are not just growing, they are thriving,” says Jim Liddy, head of Audit at KPMG. "While not immune from the effects of national or global issues, the flexibility and nimbleness that comes with being privately held has helped business leaders innovate their way to growth.”

In addition to rising revenues, respondents to the KPMG survey also report healthy current profitability, a positive outlook for the future, and plan to create jobs. Two out of five (40 percent) say their current year-on-year profits increased 6 percent or more and 20 percent report profits grew 11 percent or more. For 2013, 51 percent predict that profits will grow at least 6 percent, with 23 percent expecting growth of 11 percent or more. 

The fastest-growing private companies also remain powerful forces in job creation in what is otherwise a largely jobless recovery, with more than half (56 percent), saying they will add staff over the next year. Still, their plans to grow staffing lag behind revenue growth. 

While a majority of private companies in the survey were growing revenues, those that were not seeing such growth (13 percent) cited a range of reasons. Most frequently (41 percent), companies said their customers were experiencing their own financial duress.  Other issues included increased domestic competition (37 percent) along with global uncertainty and economic unrest (30 percent). Meanwhile, 26 percent say their revenues have declined because of new regulations, and 22 percent point to increased foreign competition.

To read the full survey release, click here.

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