We are all seeing how talks of a potential recession is slowing down dealmaking. But how many businesses are prepared in case market conditions deteriorate? Having a plan in place is nothing short of wise. Here’s why:
Any smart business owner will be prepared no matter the market conditions. And these days, between labor and supply chain issues, and the list goes on, there is a myriad of issues to worry about.
One PE investor gives advice on seven steps his firm deploying to prepare its portfolio companies for a period of economic uncertainty. Among them include: maximizing liquidity, increasing communication and launching new offerings depending on shifting customer preferences. These are all things companies should constantly be doing anyway.
Not only that. Inflation is creating buying opportunities for PE firms. The reason for that is because M&A targets with “impaired inflation costs, talent or supply chain problems” attract less than they would have 12 months ago, says one investment banker.
Hockey Hall of Famer Wayne Gretzky once said: “I skate to where the puck is going, not where it’s been.”
In other words: recession or not, PE firms and their portfolios should always try anticipate what’s going to happen next, and they will look smarter by doing so.
-Demitri Diakantonis
