TAMPA, Fla., June 25, 2013 (GLOBE NEWSWIRE) -- Later stage, mature companies need to adapt to changing market conditions to avoid running in place or falling behind with revenues, according to Marshall Morris, managing partner of Group125, a national consulting firm that helps earlier stage, high growth and mature companies improve bottom line results and create shareholder value.
"Growth is the underlying theme in our work with all of our clients," says Morris. "Not all good companies prosper, and the lesson we've learned from the recent economic downturn is that every company, regardless of its growth stage, needs to be extremely sensitive and adaptable to rapidly changing market conditions."
In assessing a company's growth potential, Group125 reviews what it refers to as the five "pillars" of business operations: corporate management, market opportunities, business model, adaptability and capital structure. Challenges at each growth phase typically focus on different aspects of these pillars.
Morris says that more mature companies have typically grown based on a specific market and model, and may be hesitant to abandon what got them to their current stage. Red flags he looks for include an over-reliance on one or two customers; over-concentration of markets, products and vendors; declining revenue and/or margin erosion; difficulties with management, including lack of accountability and poor communication; overhead growing faster than revenue and lack of growth capital.
In addition, he says the mature growth stage is a particularly important time to consider the following:
- Organic growth: Is it time to consider expansion of existing markets or development of new geographic markets? Is the new product development process adequate to fuel growth? In either of these cases, it may be necessary to access additional capital to develop the necessary pipeline.
- Acquisitions: Is expansion through acquisition a reasonable option? Does the company need additional outlets for excess capacity? Can acquisitions provide products, technology or processes that are a good complement to the existing company? Considerations will include access to capital, scalability, how to integrate acquisitions and whether there is sufficient management bandwidth.
- Exit strategies: If the business is family-owned, have arrangements been made for generational transfer? Are owners looking for strategic or financial buyers? What are the liquidity considerations? Discussions should be held about valuation, tax issues and whether management wants to stay in place.
"Adaptability for the mature company takes many forms, including openness to new market opportunities, ability to respond to regulatory changes and willingness to consider alternative growth opportunities," says Morris. "Understanding these issues can unlock new growth potential."
Group125, LLC (www.group125.com) is a national executive advisory firm focusing on middle market companies that are experiencing challenges in their growth cycle. Partnering with ownership and their executives to solve strategic issues in their businesses, the firm leads change and creates more long-term value.
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