Most Canadian financial executives say companies ready to grow
MONTREAL–The majority of Canadian financial executives surveyed by the Canadian Financial Executives Research Foundation are more optimistic about their company’s ability to obtain sufficient capital to meet its financing requirements in the next year (whether these needs are short-term, long-term or equity based).
Most financial executives surveyed said credit for working capital and growth financing is generally available to their organizations, according to the study, which was published by the research arm of Financial Executives International Canada (FEI Canada), and sponsored by EY. The report, entitled ‘Targeting an ideal capital structure’, is based on the results of an online survey of financial executives across Canada, which took place in June 2014. According to the study, even those for whom credit was less available this year, the expectation is availability will improve by the spring of 2015.
Eight out of ten Canadian financial executives surveyed say their companies are ready to grow, mainly through organic growth. Less than half said they were planning on inorganic growth.
“Financial executives are feeling bullish about their individual company prospects,” says Michael Conway, president & CEO of FEI Canada. “Overall, their expectations are positive and the research shows that, over the next 12 months, the majority will focus on overall cash flow/liquidity and operational efficiencies while most of the other companies will focus on capital structure and effectiveness.”
“With good interest rates and the economy in better shape, capital is more readily available and companies are ready to grow,” says Brian Allard, partner, EY Transaction Advisory Services. “But to take advantage of acquisition and other opportunities when they arise, they need to bake a robust due diligence process into their offensive strategy – one that can be carried out quickly, but thoroughly.”
This generally positive outlook on financing and growth is not evenly reflected across the board: Large companies generally feel the ability to meet their financing needs (working capital, long term-financing and equity) was strong, with no real change in their expected outlook. Small companies weren’t as secure in either their current position or expected outlook.
While only 61 per cent of small companies surveyed felt working capital financing was either available or very available today, this same group was more optimistic about what they’d expect in the future (66 per cent felt working capital financing was either available or very available in the future and 74 per cent felt their long term financing needs would be fulfilled).