Growth hotspots in the USA bring an interesting option for UK businesses looking west for success. Here are six market trends you need to know if you have an American dream
Recently we wrote about US growth opportunities in the Sunbelt in our US market profile. But there are also opportunities across sectors and in the mid-market. Here’s our review of the current market trends.
37% of overseas procurement to be brought back to the US over the next 12 months
Following the lead of Apple, General Electric and Wal-Mart, it is estimated that more than one-third of US businesses will move goods and services work back to the US over the next 12 months. The benefits include a reduction in lost intellectual property and/or damaged customer relationships due to late deliveries or poor quality. Also important – but harder to quantify – is the customer goodwill generated by bringing goods, services and jobs back to the US.
2. Transportation awakens
Strong exits support positive outlook
Exits in the transportation and logistics sector have been steadily declining from an all-time high of $409 million in 2009 to $173 million in 2012. However, as the economy rebounds the signals are that revenue and operating income are strong for most carriers. The prospects are for more exits, with some recent strong sales indicating a positive outlook.
3. Gas and oil reborn
84% of all M&A deals were oil-related
The US is predicted to be the world’s leading oil producer by 2020 and will ultimately surpass Saudi Arabia. In the fourth quarter of 2012, the number of US oil and gas transactions reached a 10-year high of 75 deals.
4. Private equity dry powder reaches new levels
$1 trillion PE capital to be deployed
During 2013, private equity had success attracting funds: according to research firm Preqin, investors placed $454 billion with global PE funds for the year – the highest level since 2008. As of August 2013, global PE firms had more than $1 trillion of undeployed capital; more than half of that money was in North American vehicles.
5. Optimism in food and beverage
67% of CEOs optimistic
Amid high optimism, hiring and spending are trailing. “A bumper corn crop and more stable commodity prices are re-energising the industry outlook,” says Dexter Manning, National Leader, Food and Beverage Practice, Grant Thornton.
• 67% are optimistic about 2014 (up sharply from 60% last year)
• 31% are planning to hire new staff (down from 37% last year)
• 37% are projecting capital spending increases (up from 35%)
6. Medium-sized companies grow above average
70% of all new jobs to come from middle market
Of all new jobs this year, 70% will come from middle-market companies with a turnover between $10 million and $1 billion. Interviews with 26 executives at middle-market companies revealed different approaches. Half of the respondents said they planned to grow by building on their existing business, adding additional resources to support their organisations. ‘Resources’ included increasing the store count, capturing outsourcing, winning high-profile business and increasing the number of salespeople and employees, among other things. Smaller numbers said they were looking to grow by taking a different tack, such as entering new markets, adding new products or expanding internationally.
Illustration: Alberto Antoniazzi