Indeed, six in ten respondents say that they have experienced increased pressure to boost return on equity since the start of the credit crisis.. Senior executives are finding themselve
Trang 1An Economist Intelligence Unit report
sponsored by
Trang 2© 2008 The Economist Intelligence Unit Limited All rights reserved Neither this publication nor
any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission
of The Economist Intelligence Unit Limited
All information in this report is verified to the best of the author’s and the publisher’s ability However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it
Trang 3In March 2008, the Economist Intelligence Unit surveyed
373 C-level, or board-level executives, from around the
world about their attitudes to improving return on equity
in the current business environment The survey and
paper were sponsored by The Royal Bank of Scotland
Respondents represent a range of industries, including
financial services, professional services,
manufactur-ing, and information technology Approximately 50%
of respondents represent companies with revenues in
excess of US$500m Around 50% of respondents are
chief financial officers, and the remainder are chief
executives or other C-level executives
Our editorial team conducted the survey and wrote
the paper The author was Christopher Watts and the
editor was Rob Mitchell The findings expressed in this
paper do not necessarily reflect the views of our
spon-sors Our thanks go to the survey respondents and
interviewees for their time and insight
About this research
Trang 42 © The Economist Intelligence Unit 2008
Executive summary
lReturn on equity is increasingly at risk As the
effects of the tightened credit environment spread from the US to the rest of the world, surveyed for this report are finding their ability to deliver improved return on equity curtailed Beyond the increased cost and reduced availability of finance,
a number of factors are exacerbating the problem
Chief among these are dampened business dence, downward pressure on revenues, adverse exchange rate movements and rising costs
confi-lThere is growing pressure on companies to increase return on equity Just at a time when
return on equity is under threat, investors and other stakeholders are intensifying pressure on management to deliver improved performance on this measure Indeed, six in ten respondents say that they have experienced increased pressure to boost return on equity since the start of the credit crisis Although executive management is most likely to drive initiatives to improve return on equity, shareholders and the general competitive environment are also exerting a strong influence
lExecutives are adopting a cautious approach
to balance sheet leverage Senior executives are
finding themselves in a corner: where once they would have turned to balance sheet restructur-ing to drive return on equity, today, few have an appetite for this Instead, many executives are cautiously bracing themselves for the possibility
of more difficult times ahead by paying down debt and watching cash more closely Those that have committed themselves to dividend and share buy-back programmes to increase return on equity plan
to keep these on course; cancellation of such grammes to conserve cash is a last-resort option
pro-lGreater operational efficiency is seen as an important source of improved return on equity
As companies look to the future, they expect to increase their reliance on operational efficiency
as a source of enhanced return on equity This could incorporate a range of initiatives, including greater efficiency of business processes, improved inventory management and a stronger focus on working capital management Revenue diversifi-cation and enhancement, and renewed efforts to cut costs, are also seen as important tactics
lFor some executives, it is a time for disciplined acquisitions Corporations with solid balance
sheets and strong cash flows may find that the current environment is providing opportunities to drive return on equity by means of acquisitions Many senior executives questioned for this survey see softening valuations of acquisition targets In part, this is due to uncertain growth prospects and diminished competition from private equity oper-ators, whose access to abundant cash resources has been cut back Yet a disciplined approach to acquisitions remains as critical as ever
Trang 5The financial crisis that had its origins in US
sub-prime loans has developed into one of the largest
financial shocks in living memory Since August
2007, the so-called credit crisis has been
char-acterised by a widespread tightening of lending
and accompanied by sinking stock markets Add
in the effects of record-breaking prices for oil and
other commodities, a declining dollar, plus mixed
economic indicators, and there appears to be little
reason for optimism among investors or company
executives alike
It comes as little surprise, then, that the rapid
global expansion of recent years is losing
mo-mentum The slowdown has been most evident in
developed economies, particularly the US, which
is now almost certain to dip into a recession this
year, with, at best, a gradual recovery expected for
2009 Growth in Europe, too, is expected to slow this year, again largely as a consequence of the credit crisis
The ultimate impact of the credit crisis on the global economy remains unclear What is plain, however, is that anxiety among many corporate executives across the world is running high While, for the time being, the impact in some regions may have yet to be fully felt, many corporations are an-ticipating worsening economic conditions Among senior executives of companies surveyed for this report, declining business confidence and difficulty increasing return on equity are among the most widely reported effects of the current environment
Just under half of respondents report an adverse impact on business confidence, while 37% report a similar effect on their ability to improve return on
Return on equity comes under pressure
27 26
15 18
10
4
2 25 18
28 19
7
2 15 19
27 26
11
1 19 23
24 25
8
1 13 14
28 30
15
2 21 22
23 22
10
5 26 18
23 20
9
21 12
13 21
23 11
5 21 15
19 28
12
6 18 12
16 33
15
27 18
8 15 17
15
(% respondents)
How significant has the adverse impact of the credit crisis been on the following aspects of your business?
Please rate on a scale from 1 to 5, where 1=Very significant and 5=Not significant.
Share price
Cost of borrowing
Availability of bank credit
Availability of capital markets debt
Value of assets
Capital expenditure plans
Business confidence
Ability to execute strategy
Ability to increase return on equity
Strength of balance sheet
Ability to fund pension liabilities
1 Very significant 2 3 4 5 Not significant Don’t know/Not applicable
Trang 6© The Economist Intelligence Unit 2008
equity For those companies that carry debt on their balance sheets, the growing cost and shrinking availability of bank credit and capital markets debt are also perceived as a problem
Herman Agneessens, of KBC, an integrated cassurance group based in Belgium, says that he has already felt the impact of this changed environment
ban-In December 2006, KBC communicated to investors and analysts its average return on equity target of 18.5% But since then, the worsening environment has increased the challenge of meeting this meas-ure “The targets we set at the end of 2006 will be more difficult to achieve in the environment that we see around us today,” he says
For KBC, and many other companies like it, ward pressure on revenues is hampering executives’
down-efforts to deliver targeted return on equity With a significant proportion of capital markets activity on hold, the company’s investment banking operations face a difficult environment; and in its retail asset management operations, slower customer growth
is also set to weigh on revenues One bright spot, however, is its exposure to central and eastern Europe, which have been less affected by the credit crisis than western Europe, and therefore help to stabilise revenues
Companies are facing less direct revenue effects, too For example, while central banks in the US and UK have loosened monetary policy in response
to the credit crisis, the European Central Bank
has kept its interest rate steady due to inflation concerns The resulting strength of the euro versus other currencies, such as the dollar and sterling,
is likely to put downward pressure on European exporters’ revenues The French automotive com-pany Renault, for example, reported in April that unfavourable exchange rates had dampened the revenues of its carmaking division by 2.1% in the first three months of this year
It is not only revenues that are hit by the crisis – costs are, too “The main effect of the current crisis is on our [cost of borrowing],” says Patrick Claude He points out that, for Renault’s short-term commercial paper, the spread over European overnight rates had widened from six basis points (bp, hundredths of a percentage point) to 60 bp between the start of the credit crisis and April; for its European medium-term programme, spreads had widened from 40 bp over EURIBOR to 140 bp; and for its Japanese public debt, from 30 bp over LIBOR to 120 bp The difference in interest expense (assuming Renault renewed at April 2008 rates the average debt it had outstanding under these pro-grammes in 2007) is equivalent to almost €50m an-nually – a cost burden of around 0.2% of Renault’s end-2007 equity (The group’s return on equity in
2007 was 12.7%, according to Bloomberg data)
At the same time as return on equity is coming under strain, pressure on company management
to increase returns is intensifying Six out of every ten executives say that they have seen heightened pressure to improve return on equity since the credit crisis first emerged, with 13% reporting that the increase is “significant” In some cases, this pressure is from inside the company, for example from owner-managers and from supervisory and executive management boards In other cases, the pressure is from external parties, including institu-tional shareholders and activist investors, such as hedge funds
Significant increase Slight increase
No change Slight decrease Significant decrease
What change has there been to overall levels of pressure since the credit crisis began in August 2007?
(% respondents)
13
45 34
6 1
Trang 7Under intensifying pressure to deliver higher
returns on equity, CFOs and other senior executives
are increasingly finding themselves in a corner
Textbook methods for driving return on equity
include taking on extra financial risk by means of
aggressive balance sheet restructuring – increasing
leverage, buying back shares, and paying special
dividends “But who wants to do that in this
envi-ronment?” asks Peter Clokey, head of the valuation
practice at PricewaterhouseCoopers in London
Private equity suitors
Other, please specify
Which of the following are currently exerting pressure on your
company to boost its return on equity?
Please select all that apply.
(% respondents)
61 37
31 25 22 13
3
Executive management Shareholders (institutional) Competitive pressure Shareholders (activist) Non-executive management Private equity suitors Other, please specify
Which of the following have exerted pressure on your company to boost its return on equity in the past three years?
Please select all that apply.
(% respondents)
53 40
36 22
17 13 3
Trang 8© The Economist Intelligence Unit 2008
In the wake of the galloping global economic growth, low interest rates, abundant capital, strong corporate earnings and rising stock mar-kets that characterised much of this decade, many corporate balance sheets are in robust health As
a result, some finance executives have come under pressure to drive returns by leveraging the bal-ance sheet This was certainly the experience of
Mr Agneessens of KBC “If you read analyst reports from 15 months ago, you will find that we were heavily criticised for under-leveraging our bal-ance sheet, for carrying excess capital, for being too conservative and for not having sufficient risk appetite,” he says
But now, such demands appear to be easing
Among respondents to our survey, 28% say that they have already noticed diminished pressure from activist investors, such as hedge funds and private equity investors, to increase levels of leverage A further 43% anticipate this effect In a related find-ing, almost three-quarters of executives have felt
or anticipate a reduced likelihood of takeover by a private equity operator, which may itself ease the pressure they perceive to increase leverage Cer-tainly, an increased debt to equity ratio is not gen-erally seen as a favoured way of improving return on equity over the next three years – just 15% say that this will be an important approach for them
A more widespread response in the current conditions is to reduce levels of net debt Four in ten respondents say that they plan to adopt this approach in an attempt to trim their exposure to further increases in the cost of borrowing In a similar vein, some executives – albeit a minority – are scaling back capital expenditure and acquisi-tion plans And around one-third of respondents indicate that they have put plans to optimise their capital structure on hold until there is greater clarity about how the current market downturn will develop
But while a significant proportion of companies will adjust their balance sheet according to the prevailing conditions, some prefer a consistent approach to ride out the cycles “We have stuck to our [financing] strategy through the previous cycles and we have no intention of changing it,” says Mr Agneessens of KBC “I think that right now that strategy has been vindicated.”
Caution is also the watchword as far as the ance sheet cash goes “If the markets are uncer-tain, there is nothing like having cash in the bank,” says Vijaya Sampath, Group General Counsel and Company Secretary of Bharti Enterprises, an indus-trial conglomerate based in India Indeed, when deciding how much cash to hold on the balance sheet, the most widespread motivation cited by
bal-A cautious approach to balance sheet manoeuvres
Reduce levels of debt Cancel, scale back or postpone capital expenditure plans Refinance debt or bank credit
Cancel or postpone acquisition plans Cancel, scale back or postpone debt issuance plans Cancel, scale back or postpone equity issuance plans Cancel or postpone sale or divestiture plans None of the above
Over the next year, which of the following steps do you expect your company to take in response to the credit crisis?
Select all that apply.
(% respondents)
38 34 26
25 13
12 12
23
Trang 9senior corporate executives is to hold a “war chest”
in case of possible future downturns Despite these
findings, there is little evidence that current
condi-tions have pushed senior executives into hoarding
excessive amounts of cash: 63% say that they have
about the right level of cash on their balance sheet
and just think that they have too
These results suggest that few executives have lost
sight of the cost of holding cash, despite the more
difficult operating environment This is a view that is
echoed by Sampath “Holding too much cash means
that it is not being put to proper use,” he says
What has changed, however, is that companies
are increasing the scrutiny of their cash balances to
ensure that funds are being employed effectively
“[The current environment] is making us use our
cash much more carefully and is making us restrict
the utilisation of cash more stringently than we used
to do before,” adds Sampath
For many companies, dividend growth is a key
element of a financing strategy to drive return on
equity These plans so far appear to remain
reasona-bly intact, despite the tightened credit environment
Our survey indicates that 62% of respondents have kept down equity by paying out regular dividends
in the past three years, while a slightly smaller proportion of 55% intend to continue the payment
of dividends in the next three years
Sonic Healthcare, a medical diagnostics company based in Australia, is an example of a company that
is seeking to maintain, or grow, its dividends Since the company made its first payment 12 years ago, dividends have grown every year, and have remained
at a high rate of 70% of net earnings “If the debt markets get really tough, we could consider cutting that – but we would be loath to do it,” says Chris Wilks, CFO at the company
Much the same applies to companies’ existing share buyback programmes “In the past two and a half years, we have bought back roughly one third of our equity,” says Mr Rigolle of SES Buying back and cancelling shares has helped push the group’s return
on equity from 10.3% to 17.7% since 2004, ing to Bloomberg data Despite the more difficult economic environment, Mr Rigolle remains confident
accord-in the visibility and robustness of his company’s revenue streams and cash flows Nevertheless, he has a last-resort option if economic conditions were
to become tougher for the company “We can always delay the increase in our leverage – slow down our share buyback programme for instance, throttle back
a bit the cash-out, and wait until sanity returns to the market,” he says
Senior executives questioned for our survey clearly face a dilemma On the one hand, their ability to
Holding a "war chest" to protect against future downturns
Uncertainty about future investment opportunities
The cost of raising additional funds
Interest rate considerations
The time it takes to raise funds
Ability to return cash to shareholders
Preference of shareholders
Tax considerations
Regulatory considerations
Potential liabilities (eg, possible litigation exposures in the future)
In deciding how much cash to hold on the balance sheet, which
of the following are the most important considerations?
Please select up to three.
(% respondents)
42 31
25 24 23 23 20 17 11
10
Too much About right Too little
What is your view of the amount of cash that you currently hold
on the balance sheet?
(% respondents)
17
63 21
Trang 108 © The Economist Intelligence Unit 2008
CFOs turn to the bottom line
improve return on equity has been hampered by the credit crisis, which has placed revenues under threat and increased interest expense On the other, many report intensifying pressure to deliver improved return on equity In the current environment, few companies are willing to restructure the balance sheet to resolve this dilemma And while there is
no magic bullet to solve this problem, our research shows that, increasingly, CFOs and other executives are turning to the bottom line as a way of squaring this circle
In turning to the bottom line to drive return on equity, the first option for executives – although
it is by no means easy to achieve – is to increase revenues Fully 68% of respondents say that they expect to drive their companies’ return on equity by pushing top-line growth over the next three years
But with acquisition-led strategies increasingly under pressure, executives need another approach
“That is where the emphasis has to be,” says Mr Agneessens of KBC
Some executives are considering diversifying their revenues by expanding into new product and
service areas, or by rolling out existing products and services into new geographical markets that are perhaps less affected by the current economic climate For other companies, a less risky and less capital-intensive route to revenue enhancement may lie in making greater use of long-term after-sales service contracts with customers, or in concentrat-ing greater sales and marketing effort onto their most important clients in order to attract a greater share of budgets
Still, when comparing approaches taken over the past three years with those that executives plan to take in the next three, it is interesting to note that, while increasing revenues retains pole position both
in the past and in the future, increasing operational efficiency gains in importance over this period Just less than four in ten respondents say that they fa-voured this approach in the past three years, while 59% intend to focus on it in the next three
For many of these senior finance executives, increasing operational efficiency includes trim-ming costs from the income statement For most, internal services such as IT can be streamlined
Increasing revenues Increasing operational efficiency (eg, working capital) Reducing costs
Divestment Increasing ratio of debt to equity Refinancing assets
Which of the following do you expect to be important in enabling your company to boost its return on equity in the next three years?
Please select up to three.
(% respondents)
68 59 56 17
15 14
Increasing revenues Reducing costs Increasing operational efficiency (eg, working capital) Refinancing assets
Increasing ratio of debt to equity Divestment
Which of the following have played an important role in enabling your company to boost its return on equity in the past three years?
Please select up to three.
(% respondents)
66 51
38 16
15 15
Trang 11without having any potential longer-term effects
on the company; and shared service centres offer a
chance to drive efficiency in areas such as finance
and procurement However, in those cases where
CFOs are re-thinking budgets in areas such as sales
and marketing, and research and development, they
are doing so with caution, for fear of harming their
companies’ medium and long-term revenue and
earnings prospects
The larger companies in the survey – those with
revenues greater than US$1bn a year – are
par-ticularly likely to focus on cost-cutting as a means
to increase return on equity; those with revenues
below that threshold are more likely to cite revenue
growth as their preferred course of action This
finding is likely to reflect the difference between
smaller, growing companies, that are looking to
expand, and more mature organisations, which may have less potential to grow
As part of its mid-term strategy to drive earnings growth, Renault has put clear targets for cost control
in place – a programme that has become all the more significant in the current climate Measures include reducing procurement costs by 14% by the end of this year (using the 2005 level as a base); cutting manufacturing costs by 12% by the end of 2009;
and making savings in logistics of 9% by the end of next year Furthermore, general and administrative expenses are to be brought below 4% of revenues, down from 4.8% in 2007
Increasing operational efficiency goes beyond cost-cutting, of course Many CFOs are looking to drive operational efficiency by squeezing more out
of existing balance sheet assets For most, this
Case study
SES: Investment grade mantra
Not all senior finance executives are paying down debt
or putting plans for balance sheet restructuring on hold
Indeed, only around four in ten executives questioned
for our survey say that they plan to cut back debt in
response to the credit crisis For those that do not plan
to pay down debt, some are continuing with existing
plans to invest capital or return cash to shareholders
In many cases, these are companies with solid balance
sheets and strong cash flow generation.
Luxembourg-based satellite operator SES is one such
company When Mark Rigolle arrived as CFO in August
2004, he found a corporation deleveraging after having
swallowed a big cash-and-stock acquisition three years
previously He also found a business with a very long
operating cycle, including lead times of up to five years
in capital expenditure and ten-year customer contracts
This meant that cash flows in and out of the company
were little affected by short-term, or perhaps even
mid-term, factors
Bolstered by this long-term visibility in revenues,
earnings and cash flows, the group decided to boost
return on equity by taking on greater debt and handing more cash to shareholders via share buybacks and dividends Mr Rigolle set a target debt level of 3.5 times EBITDA (versus around 2.2 times at the end of 2004) “At that level, we would still probably have one [credit rating]
notch between us and [sub-]investment grade,” he says.
At the end of 2007, SES closed its books with net debt
of €3.2bn, equivalent to just under three times EBITDA
SES has bought back around one third of its equity in the past three years, according to Mr Rigolle In 2007 alone, the group ploughed €1.6bn into share repurchases and dividends Return on equity soared to 17.7% in 2007, from 10.3% back in 2004, according to Bloomberg data
And over the same time-frame, the SES share price has more than doubled.
Despite SES’s strong financial position, Mr Rigolle remained more than aware that sentiment on the credit market could worsen Keeping an investment-grade credit rating has been the company’s mantra when it comes to determining the right level of leverage “We take a very conservative view that as long as we remain investment grade, come credit crunch or whatever,
at least we will be less exposed to erratic market sentiment,” he says.
Trang 120 © The Economist Intelligence Unit 2008
includes working capital and tightening the use of cash to lower the interest expense For CFOs in asset-light businesses, driving operational efficiency may mean better co-ordination of employees around the world, to facilitate transfer of best practice, to unify processes, and to co-ordinate output; for those in asset-intensive industries, it may include allocating capital expenditure to spruce up
In the case of EC Harris, Mr Morling reports that his company, too, is planning to sharpen its focus on costs First, the firm is tightening its cash management in order to keep interest expense to a minimum A second area of focus is asset utilisation
“We are getting far stronger on asset utilisation,
to make sure there isn’t an under-utilised resource
in one area, that can be deployed elsewhere,” he explains And third, he says, “we will be taking a far more critical view on performance on a location-by-location basis.”
Mr Agneessens of KBC also plans a renewed push for efficiency “We have a very strong reputation for cost control but we will look at our expenses even more closely than before to see whether we can do even more,” he says “It is a combination of setting ambitious targets throughout the organi-sation and monitoring the results very carefully and frequently.”
Trang 13While some senior executives are cautiously bracing
themselves for a possible worsening of economic
conditions ahead, others see opportunities in the
current environment In one of the clearest-cut
indications from executives polled for this report,
82% of executives say that they are feeling – or
are expecting to feel – the positive impact from
more attractive valuations of acquisition targets
In a related finding, 51% of respondents say that
the current credit crisis has made conditions more
favourable for the strategic acquisition of assets,
despite tightening credit conditions Only 12%
disa-gree with this statement “We have noticed some
reduction in the competition from private equity
firms,” says David Pace, CFO of Unicorn Investment
Bank, a Bahrain-based Islamic investment bank,
which has been making acquisitions not only in its
core banking business at group level, but also as an
active private equity investor
In some cases, valuations are under pressure
because of an increasingly negative – or, at the very
least, uncertain – revenue and earnings outlook But
another significant factor weighing on the valuation
of assets is reduced competition from private equity
firms, according to executives Around three-quarters
of respondents are feeling – or are anticipating feeling
– this effect
When Sonic Healthcare considered acquisition targets in the course of 2007 – the company closed around US$1bn of deals during the year – Mr Wilks says that it came up against private equity operators bidding top prices Bolstered by debt, some firms were bidding up to 13 times the target company’s EBITDA, while Sonic was reluctant to bid higher than ten times EBITDA, despite its greater potential
to drive returns through synergies Today, private equity firms’ restricted access to debt may put a more reasonable ceiling on valuations “We might now see private equity start to suffer as the industry competes for new assets,” he says
Needless to say, the companies that are now best positioned to make acquisitions are those that can finance deals with minimal recourse to external debt – for example those with strong operating cash flow Our research suggests that few companies are likely significantly to increase debt in pursuit
of acquisitions An increase of borrowing costs, reduced flexibility, and the difficulty of servicing debt in a downturn were most commonly cited by senior executives as drawbacks of taking on greater levels of debt “We are presently very comfortable
in terms of leverage,” says Mr Sampath of Bharti Enterprises “But if we have to take a big debt on a foreign acquisition, one [drawback] would be that
A time for disciplined acquisitions
45
45 43
49
28
37 28
26
(% respondents)
Has the current credit crisis had a positive impact for your company in any of the following ways?
Please select all that apply.
Less competition from private equity firms for assets
Less pressure from private equity/activist hedge funds to increase levels of leverage
More attractive valuations of assets for acquisition
Reduced likelihood of takeover by private equity
Impact already felt Anticipating this impact
Trang 142 © The Economist Intelligence Unit 2008
A note of caution
Peter Clokey, head of the valuation practice at PricewaterhouseCoopers in the UK, is all too aware
of the effect of the credit crisis on asset valuations
“Before the credit crunch, we were living in a world where valuations were driven in many sectors by the private equity community, especially in the US and Europe,” he says “There was a mass of money and easy access to bank financing.” Auctions for assets were increasingly being won by private equity houses, where ordinarily a trade buyer with potential for synergies would hope to win such a contest With large proportions of cheap debt in their financing packages, though, private equity houses were able
to pay high prices and still expect a decent return on their investment.
This is no longer the case With the tightening of the credit environment since August last year, asset values have been under pressure First, an uncertain future outlook for revenues and earnings is weighing
on valuations; and second, the investment activities of many private equity houses have been curtailed “A bit
of froth has come out of the valuation,” points out Mr Clokey “There’s now a return to trying to understand where the value lies.”
While the time may be ripe for trade buyers to make selective acquisitions, Mr Clokey sounds a note
of caution For one thing, he says, valuation has become more difficult “The one-year multiple [such
as a multiple of EBITDA] becomes a blunter tool at a time when valuations are falling and there is a threat
to short-term profits.” Moreover, once an investment has been made, it is now more difficult to retreat
“If you make an [ill-advised] investment when the market is hot, you can always exit it to remedy any errors you make – perhaps even at a profit Now, it’s more difficult to do this.”
you have to earn a return on that debt We need to see that the internal rate of return that we make on the acquisition is good enough.”
To be sure, acquisitions in the current ment will be scrutinised more closely by investors, lenders and supervisory boards alike – increasing the pressure on executives to pursue only those deals that make a clear contribution to strategic, opera-tional and financial goals Again, discipline is key
environ-Sonic Healthcare’s strategy includes driving return
on equity by folding small and mid-sized acquisitions into its infrastructure worldwide “We try to be disci-plined in terms of return on equity, to drive value for shareholders We would like to think return on equity will grow within 12 months of completing a strategic acquisition,” says CFO Mr Wilks
So what effect is the worsening credit environment having? “Perhaps we are becoming a little choosier,”
says Mr Wilks “Of five acquisitions that we would have been completed previously, perhaps now we may only buy the three most synergistic ones.”