Robb Hilson, Small Business Executive at Bank of America
Small business owners in the US are feeling buoyant about the national economy, with many feeling positive about health of the economy and their potential for economic growth, according to the latest Bank of America/CFI Group Small Business Forecast.
Small business owners rated the health of their local economy 20% higher than they did in August 2014. In addition, they are 14% more optimistic about their potential for economic growth over the next six months. Overall, the small business owners’ satisfaction/optimism index moved from a 69 to a 70, on a scale of 1-100.
“Entrepreneurs are feeling the effects of an improving economy and they believe 2015 will be a strong year for small businesses,” said Robb Hilson, Small Business Executive at Bank of America. “Economic optimism is running high, and we’re excited to see how small business owners’ enthusiasm and increased confidence will shape their plans for long-term business growth.”
When asked to assess the health of their small businesses, 37% of respondents said small businesses are doing ‘well’ or ‘very well’, up from 27% in August 2014. On the flip side, just 15% feel the health of their small business is ‘poor’ or ‘very poor’, compared to 21% who shared those responses six months ago. Similar to previous findings though, entrepreneurs aren’t making immediate changes to their business just yet and are still taking a relatively cautious approach to growing in terms of hiring and investment.
The financial environment is also primed to support small business growth, with small business owners rating their access to credit up 7% from six months ago. Small business owners also reported a better cash flow position for their business, with research indicating a 4% improvement from the previous study.
Millennials tend to be the most positive about the future of their business, scoring 80 out of 100 in the Optimism category, with Gen-Xers scoring 73 and boomers 67. They are also the most confident about the state of the economy (58 out of 100), while boomers are more negative (49). This was similar to findings in the fall 2014 Bank of America Small Business Owner Report. In addition, millennials are also most likely to plan to grow their business (65 out of 100), followed closely by Gen-Xers (61).
Rob Fisher, PwC’s US technology deals leader
With 2014 noted for a series of record-setting and transformative deals, momentum is expected to carry over into 2015 as dealmakers continue to invest in cloud, mobile and security, and seek out emerging technologies such as Internet of Things (IoT), according to PwC’s US Technology Deals Insights 2014 Year in Review and 2015 Outlook report.
“2014 closed with technology deal activity not seen since the dot com era, thanks to a record number of billion dollar transactions and a resurgence of mid-market deals,” said Rob Fisher, PwC’s US technology deals leader. “As we consider the almost $350 billion (€312 billion) in cash and securities on hand at the top 25 technology companies, record levels of private equity funds waiting to be deployed and projected full pipelines from every angle of the market, 2015 promises to be another active and exciting year for technology M&A.”
According to Deal Insights, cumulative technology deal value for 2014 closed at $161.4 billion (€144 billion), a 62% increase over 2013, which had a total deal value of $99.8 billion (€89 billion). Average deal value grew to $583 million (€521 million), compared to $489 million (€437 million) in 2013.
Technology IPOs continued to remain a key market driver and reached their highest levels since the dot com era. Even excluding the single largest IPO, valued at nearly $22 billion (€19.6 billion), IPO value increased 40% and volume increased 18% over 2013. In total, there were 60 technology IPOs, an increase over the 51 posted in 2013, making 2014 the most active year since 2000.
The IMF has cut its global growth forecast for 2015 to 3.5%, down 0.3% from its October prediction. It expects a lower oil price to be positive for the global economy, but to be offset by negative factors.
The IMF believes a lower oil price will stimulate more growth in advanced economies that import oil rather than in emerging economies, as the benefit feeds more directly through to consumers. In many developing nations, like India, the government subsidises energy consumption, therefore the government tends to benefit from price drops.
However, the IMF believes the US will see strong growth in 2015, helping push the global economy upwards. The US is forecast to see 3.6% growth in 2015, up 0.5% from the IMF’s October forecast.
Meanwhile the IMF sounds notes of concern over Russia, and China. The Russian economy is expected to contract by 3% in 2015, while China is expected to grow by 6.8%, a 0.3% reduction from October's forecast. This follows on official data just released showing Chinese growth slowed to 7.4% in 2014, an enviable level of growth for advanced economies, but its lowest level in 24 years.
European growth has been downgraded and is now expected to come in at 1.2%, down 0.2% from October. However, Spain provides a European bright spot, with 2% growth expected this year, up 0.3% on October's forecast. The UK is expected to grow by 2.7% in 2015, unchanged from October.
“Economic forecasts of this nature are more like a dowsing rod than a GPS tracking system, but they do confirm what market behaviour suggests- that uncertainty has increased in recent months,” said Laith Khalaf, Senior Analyst for UK-based financial service company Hargreaves Lansdown.
“The falling oil price is of course a major source of instability, though as the IMF notes this should be a boost to global economic activity, albeit with winners and losers.
“The US remains teacher's pet, with the growth forecast for the world's most influential economy revised sharply upwards. At the other end of the spectrum Russia is expected to suffer a 3% contracting in its economy over 2015, as a result of its high exposure to oil and gas production.
“While the IMF strikes a largely negative tone, stock markets have already absorbed much, if not all of the information referred to in these forecasts. For instance Russian and Chinese stocks are already looking relatively inexpensive by historical standards, while US companies are more fully valued, reflecting the respective conditions and confidence in these economies.”
Nearly half of CFOs expect the US economy to improve during the next six months and only 9% expect it to worsen, according to the Grant Thornton LLP 2014 Fall CFO Survey. The biannual survey reflects the insights of more than 1,000 CFOs and other senior financial executives across the US.
The survey’s findings indicate that economic optimism has remained stable during the past year despite increasing global uncertainty. In spring 2014, 51% of respondents expected the economy to improve during the next six months, compared to 40% in fall 2013 and 45% in the firm’s spring 2013 survey.
The most common growth strategies for businesses in the upcoming year include pursuing organic growth in existing markets (87%) and introducing new products or services (72%). In addition, more than one-third (37%) of companies are considering a merger or acquisition in the next 12 months. For companies with more than $5 billion (€4.2 billion) in annual revenue, that number is even higher at 60%.
“While it’s encouraging that CFOs aren’t expecting contraction, they’re not predicting significant growth either,” said Stephen Chipman, Chief Executive Officer of Grant Thornton. “It’s vital that our country’s political leaders focus now on resolving this uncertainty by advancing comprehensive tax and entitlement reforms to spur economic growth.”
The notion that US economic optimism remains stable amidst increasing global uncertainty correlates with other recent research from Grant Thornton. The Grant Thornton International Business Report found that optimism for the nation’s economic outlook among US business leaders remained strong at a net balance of 69% in third quarter 2014 while Eurozone optimism dropped to a net balance of 5%, down 30 percentage points from the previous quarter. In particular, German optimism plummeted 43 percentage points to 36%.
“The economic environment in Germany has very significant implications for the US economy and businesses,” added Mr. Chipman. “We have yet to realise the domestic repercussions of the weakening Eurozone and will be watching the situation closely in the coming months.”
As at December, 2014 had seen 288 IPOs on US exchanges, amounting to $95.2 billion (€80.8 billion), a 54% increase in capital over 2013, according to the latest EY Global IPO Trends: 2014 Q4 report.
While 2013 saw a revival of IPOs in the US, 2014 was even more exceptional, according to EY. As of December, the number of listings was at its highest point since 2000 and a 27% increase over 2013.
While Q4 saw a pause in the markets after the Alibaba listing, IPO investments still remained strong throughout the end of the year given the lack of alternative investment options and low interest rates. In addition, with stock markets trending higher, IPOs outperformed market indices. Companies that listed on US exchanges in 2014 saw average year-to-date returns of 27.8%, compared to the S&P 500 at 12.2%.
“Concerns this is a 2000-like bubble are overplayed,” said Jackie Kelley, EY Global and Americas IPO Leader. “Companies coming to the public markets are well-led, well-priced and have a good story to tell. Their stocks tend to outperform the market attracting solid investor interest.”
Global IPO activity also gained momentum with 1,206 IPOs, which raised $256.5 billion (€218 billion). “This was the best year for IPOs since 2011,” said Ms. Kelley.
In addition, PE- and VC-backed exits were the most significant driver of US IPO activity. A total of $68.2 billion (€58 billion) was raised via 181 financial-sponsored IPOs and accounted for 72% of US IPOs by value and 63% by number.
The success of the Alibaba listing encouraged more cross-border activity, with the majority coming from Europe (26), China (16) and Israel (12). Cross-border activity still remains strong in the US, which accounts for 52% of cross-border deals globally by number and 80% by capital raised throughout 2014.
“In 2014, the US attracted more cross-border IPOs than any other region and its stock exchanges led the world in terms of deals and capital raised. In addition to strong IPO valuations on foreign listings, the growing familiarity with US accounting regulations, the overall strength of the US markets and the access to capital are likely to encourage more cross-border IPOs on US exchanges in 2015,” said Ms. Kelley. In addition, the US hosted more foreign IPOs in 2014 than any other market, with 67 IPOs raising $40.8 billion (€34.6 billion).
This year looks set to be another strong trading year, according to EY. The firm reported that there is a pipeline of 100 companies ready to list in 2015, of which 60 are expected to go public and raise around $22 billion (€18.6 billion) in Q1 2015.
BP's business activities in the US helped generate close to $143 billion (€121 billion) in economic impact in 2013 and currently support nearly 220,000 American jobs, according to the company's recent US Economic Impact Report 2014.
Released early January, BP's new report provides a detailed, state-by-state look at the breadth and impact of the company's activities in America. Since 2009, BP has invested nearly $50 billion (€42 billion), making it America's largest energy investor. In 2013 alone, BP spent $22 billion (€18.6 billion) with vendors across the country on products and services, ranging from offshore drilling rigs to gasoline-producing equipment for its refineries.
“No energy company has invested more in the US over the past five years than BP,” said John Mingé, BP America Chairman and President. “Our investments not only provide the energy to power the nation, but they also support hundreds of thousands of jobs that fuel the economy.”
BP's business investments in the US include oil and natural gas exploration and production, fuel and chemical refining, lubricants, shipping, trading, renewable energy production and technology research and development. The US also is home to a number of operations that serve BP's global businesses, such as the Centre for High-Performance Computing in Houston, which houses the world's largest supercomputer for commercial research. Nearly 40% of BP's publicly traded shares are also held in the US.
