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Private companies optimistic: KPMG/Forbes

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Private companies optimistic:  KPMG/Forbes

Higher growth expectations; regulations and tax still weigh

A new survey released by KPMG and Forbes indicates that executives at private middle market companies are increasingly optimistic about their company’s prospects. 

According to the report, while prospects for the broader U.S. economy remain sour, 58% of private company executives say their companies are poised for revenue growth of 6% or greater in the year ahead. 15% say growth will range from 11% to 20%.  Perhaps most remarkably, about 10% of these executives believe growth will run greater than 20%.

Additional findings from the report include:

  • Executives from private companies are also experiencing healthy current profitability while anticipating continued future earnings growth. Two out of five, 40%, say their current year on year profits increased 6% or more—with 20% saying profits grew 11% or more. Looking at the year ahead, profitability is expected to further improve: 51% say profits will grow 6% or more; 23% expect growth of 11% or more.
  • With revenues and profits on the uptick, private companies are positioned to remain one of the strongest job creation forces in the economy. Over half, 56%, say they will be beefing up their staff over the next year.

Private company executives’ optimism is tempered, however, by what they perceive as excessive regulation and a heavy tax burden, according to the report.  This fact may explain why the survey found that job creation at private companies is far less than would be expected give the revenue and profit increases forecast.

Reflecting the concerns over regulatory activism, new healthcare rules and generally higher taxes, job creation significantly lags other indicators of private company performance. Put another way, absent so many head-winds, private company job growth could be even stronger.

The full report can be found here.

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