M&A

Top Finance Concerns

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The CFO Rising conference yesterday morning was right up my alley with sessions on Creating Alignment in the C-Suite, A New Dynamic in the Boardroom, and … particularly … Finance Skills for a New Decade. My next few blog posts will talk about what I heard, but I’ll start with some interesting stats that opened the morning.

The CFOs in attendance were polled around critical issues they are facing, and here are some of the results …

–89% felt the worst was over but do not anticipate a turn around anytime soon

–Only 4% felt growth was likely to happen in the next several months

–70% were concerned and VERY concerned (35%) around the cost effectiveness of proposed government regulations

–When asked about the proposed health care legislation, 69% were very concerned about the tax impacts and 62% were very concerned about the quality of care

Conversely, the attendees felt there was some good that came out of the economic downturn … it has forced finance to go back to basics.

–32% said they now had a core business focus

–25% were focused on increasing productivity

–3 out of 4 indicated they would be preserving cash as a hedge against economic uncertainty

–77% indicated their focus would be on organic growth … which means …

–Only 10% indicated M&A was a core business focus

2010 Manufacturing Sector CFO Outlook

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There are some key statistics noted in Bank of America’s annual Manufacturing Sector survey. If you are in that sector, it’s a great read to understand what skills will be in demand in the upcoming year. A caveat … 78% of the respondents were privately-owned companies.

More than 62% of the CFOs surveyed indicated they plan to maintain their current workforce size. Of the remaining respondents, 28% will be hiring and 9% will be downsizing. If you’re a high-value target and seeking an opportunity … none of these numbers really matter. There are always opportunities when you can take away a company’s pain/problems/challenges and help them grow.

So what skill sets, along with measurable proof of positive impact, will manufacturing companies be seeking in their finance executives? Here’s my take.

—M&A. Twenty-five (25%) percent of the private companies expect to participate in a merger or acquisition, while 37% of public companies anticipate M&A activities.

—Strong financing acumen within cash management, letters of credit, and asset management (as the top 3). Other financial product knowledge includes asset-based financing, cash flow financing, foreign exchange, and retirement plan services.

—Working capital and capital expenditure are the top two needs cited.

—Revenue growth and cash flow are the two primary financial concerns of manufacturing CFOs.

Who’s hiring? According to the survey, it is those companies who are expecting M&A activity, primarily in the west, with revenues between $500 million and $2 billion.