Outlook for 2013: Could deal values improve?
December 14, 2012
Stephen Gregson, corporate finance director at Chiks, gives his thoughts on 2013.
Indications are that, for the time being, what is happening in the wider economy is ‘the new normal’ and as such I expect 2013 to feel largely the same as 2012. But we must resist the urge to regard this as terrible. Things could be far worse – and are for many other countries.
Wage growth for the vast majority is likely to continue to stagnate. Increasing food and energy prices are likely to persist and hence disposable incomes will be squeezed. Those with debt will be mindful of paying it down and perhaps quite quickly. All of which begs the question – where is sustainable growth going to come from?
There are always going to be some businesses doing well and some businesses that are suffering. In terms of growth areas, I can see it being another year where those businesses that prosper are those that offer value for money or a niche offering. Value brands and offers I suspect will continue to prosper.
Looking at the corporate finance market, there is still going to be deal activity. I expect that funding availability will improve – but it may feel to some like this is happening at a glacial pace. As regards valuations, I don’t see them falling further and actually there is probably greater potential for multiples to improve – as buyers become more confident that the future, although quite flat, can be better predicted.
Relatively speaking, employment seems robust, even given the other negative economic indicators, and that gives me some optimism. We need another year of stability and my main piece of advice to businesses is to concentrate on what you’re good at and try to do it better.