A majority of middle-market CFOs are predicting an economic recovery and revenue increases for their companies in 2021, according to a new survey by BDO USA.
The 2021 BDO Middle Market CFO Outlook Survey, found that 60 percent of the 600 CFOs polled at midsized companies anticipate economic recovery, while 56 percent expect revenue increases, in 2021. In addition, 62 percent of the survey respondents anticipate their company will be thriving a year from now.
Nearly three-fourths of the middle-market CFOs said their companies received government assistance as a result of the crisis. Cost cutting and reorganization for resilience are the top priorities for many CFOs.
Murat Kilicoglu joined Cota Capital as a Principal in 2022 focusing on the evaluation and monitoring of private investments as well as designing and implementing value creation strategies across the broad Cota portfolio. Prior to Cota, Murat was a Vice President in the Investment Banking Division of Evercore focusing on mergers and acquisitions within the technology sector. Prior to Evercore, Murat was a Vice President at Credit Suisse in the Investment Banking Division focusing his time on strategic advisory and financing assignments for software and FinTech companies. Previously, Murat was an Investment Associate at TRPE Capital focusing on private equity and venture capital investments across the technology sector. Murat began his career at Roland Berger, where he worked as a strategy consultant to technology firms and private equity portfolio companies in the areas of corporate strategy, growth strategy, go-to-market strategy, commercial due diligence, and corporate restructuring. Murat received a B.S. in Electrical and Electronics Engineering from Bogazici University in Istanbul and an M.B.A. from The Wharton School at the University of Pennsylvania.
Chris Denver is a director at Stout. He has over 20 years of experience assisting domestic and international publicly traded and privately held companies with complex accounting and financial reporting issues, such as debt and equity issuances, share-based payment arrangements, purchase accounting, revenue recognition, earnings per share, and the adoption of new accounting standards.
Dillon Clair is the director of state advocacy and litigation at the ERISA Industry Committee.
The pandemic made an impact on nearly every company, and 39 percent of the CFOs polled indicate that the pandemic accelerated digital transformation at their companies, while 38 percent said it opened new expansion opportunities for products or services and 31 percent for new geographies.
“Unprecedented was the buzzword in 2020 for good reason,” said BDO USA CEO Wayne Berson in a statement. “Many middle-market companies persevered through levels of transformation and disruption in one year akin to what some companies experience in a full lifecycle. But rather than hunker down and endure, middle market leaders endeavor to move forward to refresh strategy and enhance agility. While we’re not out of the woods, the middle market is poised to pivot to new levels of potential.”
Deal flow was unsteady last year as CFOs assessed and reassessed the possible outcomes of the pandemic’s impact on their business. However, CFOs appear to be more optimistic this year, with 29 percent planning to seek private equity investment, 24 percent want a merger or acquisition and 20 percent hope to pursue an IPO.
While returning to the office or floor is critical for many CFOs, 43 percent of the respondents said they would increase or establish permanent remote work options. Office space is likely to be downsized, with 28 percent of the CFOs polled planning to eliminate or consolidate their current real estate footprint. CFOs also intend to build a more flexible workforce through automation (38 percent) and outsourcing (32 percent).
The main threats cited by the CFOs include a prolonged economic downturn, competitive pressure, supply chain disruption and falling behind on technology or innovation.
Coming out of an election year, tax challenges are also going to be important, with understanding total tax liability (19 percent) and navigating shifting trade and tariff policies (17 percent) among the top challenges cited by the CFOs. Managing disclosures and risk factors is also a top financial reporting challenge as the CFOs try to assess how to communicate impact of COVID-19 on matters that may be material to stakeholders.
