Trendsetter barometer

Transcription

1 Trendsetter barometer Private Company Services Q Business outlook chart pack Full survey results PwC

2 Contents 1 Quarterly highlights Page 1.1 Key indicators for the business outlook Trendsetter quarterly highlights 4 2 Economic views 2.1 View of US economy, this quarter View of US economy, next 12 months View of world economy, this quarter View of world economy, next 12 months 9 3 Company performance 3.1 Company revenue growth, calendar year Industry growth, calendar year International sales Changes in gross margins Changes in costs and prices Finished inventories as a percent of sales Level of operating capacity New bank loans, credit terms and financing Change in credit availability 19 4 Business outlook, next 12 months 4.1 Revenue growth, next 12 months International sales, next 12 months Percent planning to hire Percent planning to hire by type of employee Percent planning major new investments of capital Percent planning to increase operational spending Expected barriers to business growth Plans for M&A and other business initiatives 28 5 Survey demographics and research methodology 29 PwC 2

3 Key indicators for the business outlook Chart 1.1 Key indicators for the business outlook A quarter-over-quarter comparison of the key indicators shows how the 12-month outlook has changed. The change column indicates the movement of opinion from fourth-quarter 2016 to first-quarter Business outlook, next 12 months Change Page 2Q 3Q 4Q 4Q16 Post- Election 17 4Q 17 Optimistic about US economy 41% 39% 38% 59% 7 66% 7 Optimistic about world economy 1 19% 22% 23% 31% 28% 22% 9 Expect positive revenue growth 86% 91% 83% 84% 91% 9 21 Average growth rate expected % 5.4% 5.5% % 21 Planning major new investments 27% 27% 28% 28% 28% 27% = 25 New investments as a % of sales % 6.4% 7.4% 8.2% 6.6% 25 Planning to hire 52% 41% 39% 47% 48% 5 23 New workers as a % of workforce (net) +1.3% +1.3% +1.2% +2.3% +2.5% +2.8% 23 Expected barriers to growth Lack of demand 59% 62% 49% 55% 56% 57% = 27 Legislative/regulatory pressures 41% 38% 38% 48% 54% 53% 27 Profitability/decreasing margins 34% 37% 36% 41% 46% 43% = 27 Lack of qualified workers 29% 3 26% 28% 26% 33% 27 Pressure for increased wages 22% 16% 16% 28% 28% 33% 27 Competition from foreign markets 15% 13% 19% 24% 26% 27% 27 Oil/energy prices 19% 17% 12% 19% 18% 27% 27 Increased taxation 29% 19% 28% 38% 43% 27 Higher interest rates 17% 9% 9% 11% 1 18% 27 Strength of the US dollar 24% 24% 13% 17% 15% 14% 27 Lack of capital for investment 12% 9% 8% 9% 9% 11% = Reflects responses from international marketers only. PwC 3

4 Quarterly highlights Chart 1.2 International marketers outpace domestic-only peers Business outlook, next 12 months International marketers (n=128) Domesticonly peers (n=173) Optimistic about US economy 65% 67% Optimistic about world economy 22% Revenue growth rate 6.7% 5.6% International sales (% of total) 19% Planning major capital investments 32% 24% Planning expansion to new markets abroad 1 1% Plans to increase spending (net) 75% 73% New products/services 48% 29% Information technology 23% 31% Geographic expansion 18% 21% R&D 28% 9% Sales promotion 23% Advertising 13% 21% Business acquisitions 9% 1 Prior quarter s performance Increased gross margins (net) +12% +15% Increased costs (net) % Increased prices (net) +21% +18% Planning to hire 46% 52% Percent of workforce (net) 2.1% 3.5% Note: International marketers have average revenue of $450.1 million; their domesticonly peers have average revenue of $276.9 million. PwC 4

5 Economic views

6 Economic views View of the US economy, this quarter Which best describes your view of the US economy this quarter? In first-quarter 2017, 65 percent of panelists said they believed the US economy was growing, 10 points above the fourth quarter s 55 percent and 6 points above a year ago (59 percent). Only 3 percent said the US economy was declining, and 32 percent felt it was about the same. Chart 2.1 View of the US economy, this quarter Growing Unchanged Declining Growing 10 Growing Unchanged Unchanged Declining Declining Note: In 2017, n=301,, n=183,, n=118 PwC 6

7 Economic views View of the US economy, next 12 months Looking ahead at the next 12 months, how do you feel about the prospects for the US economy? Looking ahead, 66 percent of panelists were optimistic about the US economy s prospects over the next 12 months: a rise of 7 points from the fourth quarter s 59 percent, and 25 points above a year ago (41 percent). Those expressing pessimism dropped to 2 percent (down 3 points), and 32 percent said they were uncertain. Chart 2.2 View of the US economy, next 12 months Optimistic Uncertain Pessimistic Optimistic 10 Optimistic Uncertain Uncertain Pessimistic Pessimistic '16 2Q '16 3Q '16 4Q '16 ' Note: In 2017, n=301,, n=183,, n=118 PwC 7

8 Economic views View of the world economy, this quarter Which best describes your view of the world economy this quarter? (international marketers only) Chart 2.3 View of the world economy, this quarter In first-quarter 2017, 20 percent of respondents who sell abroad viewed the world economy as growing (up 4 points from the 16 percent of panelists who said this in the fourth quarter). A year ago, only 12 percent of panelists thought the world economy was growing, 8 points lower. On the debit side, 16 percent of all international panelists viewed the world economy as declining in the first quarter (3 points less), and most, 64 percent viewed it as unchanged Growing Unchanged Declining Growing Unchanged Growing Unchanged 8 Declining 8 Declining Note: In 2017 All international marketers, n=128,, n=86,, n=42 PwC 8

9 Economic views View of the world economy, next 12 months Looking ahead at the next 12 months, how do you feel about the prospects for the world economy? (international marketers only) Of international marketers surveyed in the first quarter of 2017, 22 percent expressed optimism about the world economy s prospects over the next 12 months, 9 points lower than the fourth quarter (31 percent) and 3 points above a year ago, when it was 19 percent. The percentage expressing pessimism was at 15 percent (down 2 points), which is 12 points less than a year ago (27 percent), while a majority of 63 percent were uncertain. Chart 2.4 View of the world economy, next 12 months Optimistic Uncertain 31 Pessimistic Optimistic Uncertain Pessimistic Optimistic Uncertain Pessimistic Note: In 2017 All international marketers, n=128,, n=86,, n=42 PwC 9

10 Company performance

11 Company performance Company revenue growth, calendar year What is your company s estimated revenue growth rate for the calendar year? For calendar-year 2017, the composite average owncompany growth estimates is expected to rise to 5.7 percent. A year ago, it was a higher 6.8 percent (a decline of 16 percent). Of executive officers interviewed, 88 percent reported positive revenue growth through the calendar year, with 14 percent reporting double-digit growth (up 5 points) and 74 percent single-digit growth. Three percent reported negative revenue growth, and 8 percent reported zero growth. One percent was not reported. Note that product firms increased to 4.9 percent pace, while service companies rose to a much higher 6.9 percent. Chart 3.1 Company revenue growth, calendar year or greater Between 10- Between 0-1 Zero Negative Not reported Mean 6.8% 5.6% 4.6% 4.6% 5.7% or greater Between 10- Between 0-1 Zero Negative Not reported or greater Between 10- Between 0-1 Zero Negative Not reported Mean 6.5% 4.8% 3.8% 3.6% 4.9% Mean % 5.8% 5.9% 6.9% Note: In 2017, n=301,, n=183,, n=118 PwC 11

12 Company performance Industry growth, calendar year What is your industry s estimated growth rate for the calendar year? Industry sector growth projections for calendar-year 2017 rose sharply to an average 4.6 percent in firstquarter 2017, but is now similar to a year ago (4.5 percent). Chart 3.2 Industry growth, calendar year or greater Between 10- Between 0-1 Zero Negative Not reported Mean +4.5% +4.5% +3.5% +3.5% +4.6% or greater Between 10- Between or greater Between 10- Between Zero Negative Not reported Zero Negative Not reported Mean % % +4.2% Mean +5.2% +5.2% +4.2% % Note: In 2017, n=301,, n=183,, n=118 PwC 12

13 Company performance International sales Are international sales up, down, or the same compared with three months ago? In the first quarter, 29 percent of Trendsetter companies that sell internationally increased sales abroad (up one point from the percentage of companies reporting increases in the fourth quarter and up 7 points from a year ago, 22 percent). On the debit side, 15 percent reported fewer sales (down 1 point from the percentage reporting the prior quarter and same as a year ago, while 56 percent reported no change. Quarterly international sales were up slightly quarter-to-quarter (net plus 14 points), 2 points above the prior quarter (plus 12 points). Chart 3.3 International sales Up Down Up Down Up Down Note: In 2017 All international marketers, n=128,, n=86,, n=42 PwC 13

14 Company performance Changes in gross margins Are gross margins up, down, or the same compared with three months ago? Chart 3.4 Changes in gross margins Gross margins continued positive in first-quarter 2017, with 27 percent of Trendsetter companies reporting higher margins (down 5 points) and 13 percent reporting lower margins, for a plus 14 percent net change, 2 points less than the previous quarter s positive net plus 16 percent, but 4 points above a year ago (net plus 10 percent) Up Down Net +1 +3% +6% +16% +14% Up Down Up Down Net +9% +3% +5% +15% +9% Net +11% +4% +7% +18% +22% Note: In 2017, n=301,, n=183,, n=118 PwC 14

15 Company performance Changes in costs and prices Are costs up, down, or the same compared with three months ago? Prices? In first-quarter 2017, costs were a bit lower, while prices remained moderately high. Costs increased a net 12 percent, with 20 percent of Trendsetter companies reporting higher costs and 8 percent reporting lower costs. Higher price increases were reported by a net 19 percent, as 24 percent reported higher prices and 5 percent said they were lower. Chart 3.5 Changes in costs and prices Costs 10 Up Down Net +12% +22% +23% +16% +12% Prices Net % +15% +14% +19% Up Down Costs Net % +18% +12% +13% Up Down Costs 10 Up Down Net +16% +23% % +12% Prices Up Down Prices Up Down Net +13% +12% +14% % Net +28% +17% +15% + +23% Note: In 2017, n=301,, n=183,, n=118 PwC 15

16 Company performance Finished inventories as a percent of sales Are finished inventories as a percent of sales up, down, or the same compared with three months ago? (product companies only) Overall, finished inventories in the first quarter was flat: up for 19 percent of product companies and down for 17 percent, for a net plus 2 percent reporting higher inventories, same as a year ago (net plus 2 percent). Sixty-four percent of respondents said their inventories remained about the same. These findings indicate limited overall inventory movement in Chart 3.6 Finished inventories as a percent of sales Up Down Net +2% -2% +8% +4% +2% Note: In 2017, n=183 PwC 16

17 Company performance Level of operating capacity What is your organization s current operating capacity? Operating capacity is an estimate of the current level of permanent staffing compared with what is needed for full-capacity output. In the first quarter, the average level of operating capacity for respondents rose a point to an estimated 84.0 percent, above to the fourth quarter s 82.8 percent, but is above a year ago (83.8 percent). Fifty-two percent reported near full capacity, same as a year ago (52 percent). Chart 3.7 Level of operating capacity Near full About 3/4 capacity About 1/2 capacity Not reported Mean 83.8% 82.9% 83.1% 82.8% Near full About 3/4 capacity About 1/2 capacity Not reported Near full About 3/4 capacity About 1/2 capacity Not reported '16 2Q '16 3Q '16 4Q '16 4Q ' '16 2Q '16 3Q '16 4Q '16 4Q '16 Mean 83.7% 81.1% 82.1% 81.4% 82.8% Mean % 84.5% 84.6% 85.8% Note: In 2017, n=301,, n=183,, n=118 PwC 17

18 Company performance New bank loans, credit terms and financing In the past three months, has your organization initiated any new bank loans, longer credit terms from your suppliers, or other types of financing? What is the current interest rate you are paying for your bank financing? Banking activity was found to have continued in firstquarter 2017, with 22 percent of panelists reporting financing activity (same as the prior quarter). Twenty percent reported new bank loans, down 1 point from the fourth quarter but 4 points above a year ago. The mean interest rate paid on loans by these companies was at 4.11 percent, 25 basis points above the prior quarter, and 63 points above a year ago (3.48 percent). Chart 3.8 New bank loans, credit terms and financing 16 2Q 16 3Q 16 4Q Any activity 18% 17% 22% 22% New bank loans 16% 18% 15% 21% New credit terms (suppliers) 3% 3% 4% 3% 3% All other new financing 1% 1% 1% 1% 1% Mean interest rate (all bank loans) 3.48% 3.57% 3.67% 3.86% 4.11% 2Q 3Q 4Q 17 2Q 3Q 4Q 17 Any activity 16% 16% 22% 24% New bank loans 19% 13% 13% 22% New credit terms (suppliers) 5% 4% 6% 5% 4% All other new financing 1% 1% 1% 1% 1% Mean interest rate (all bank loans) 3.41% 3.66% 3.72% % Any activity 16% 24% 19% 22% 18% New bank loans 14% 24% 18% 22% 17% New credit terms (suppliers) 1% 2% 1% 1% 2% All other new financing 2% --- 1% 1% 1% Mean interest rate (all bank loans) 3.55% 3.48% 3.59% 3.94% 4. Note: In 2017, n=301,, n=183,, n=118 PwC 18

19 Company performance Change in credit availability How has credit availability changed in the past three months for your organization? (based on current banking relationships) Credit availability in first-quarter 2017 eased, as 17 percent of panelists report an uptick in credit availability (3 points below the prior quarter, but 3 points above a year ago). One percent report a decrease, and 82 percent report no change. Chart 3.9 Change in credit availability Increased Decreased Increased Increased 8 Decreased 8 Decreased Note: In 2017, n=301,, n=183,, n=118 PwC 19

20 Business outlook, next 12 months

21 Business outlook, next 12 months Revenue growth, next 12 months What is your organization s estimated revenue growth rate for the next 12 months? A higher revenue growth rate was forecast for own companies over the next 12 months: 6.1 percent, versus the prior quarter s 5.5 percent, but below last years 7.0 percent (down 13 percent). Ninety percent said they expected positive own-company growth 15 percent projected double-digit revenue growth (up 4 points) and 75 percent single-digit growth. Only 1 percent expected negative growth over the next 12 months, 4 percent expected zero growth, and 5 percent were not reported. The overall rate of growth was up overall, service firms rose to 7.6 percent and have been holding up better, while product firms rose to 5.1 percent. Chart 4.1 Revenue growth, next 12 months Mean % 5.4% 5.5% 6.1% 4 1 or greater Between 10- Between 0-1 Zero Negative Not reported or greater Between 10- Between 0-1 Zero Negative Not reported or greater Between 10- Between 0-1 Zero Negative Not reported Mean 6.8% 5.9% 4.8% 4.8% 5.1% Mean 7.3% 6.8% 6.2% 6.5% 7.6% Note: In 2017, n=301,, n=183,, n=118 PwC 21

22 Business outlook, next 12 months International sales, next 12 months What percent of your business s total revenue over the next 12 months do you expect to derive from international sales? (international marketers only) Panelists selling abroad projected an average contribution of international sales to total revenue over the next 12 months of 19 percent, same as the prior quarter s 19 percent and a year ago (19 percent). Chart 4.2 International sales, next 12 months '16 2Q '16 3Q '16 4Q '16 ' Note: In 2017 All international marketers, n=128,, n=86,, n=42 PwC 22

23 Business outlook, next 12 months Percent planning to hire Do you plan to add or reduce the number of fulltime equivalent employees over the next 12 months? If so, how many? Do you plan to increase hourly wages? Looking ahead, 50 percent of panelists plan to add employees to their workforces over the next 12 months, up 3 points from the 47 percent in the fourth quarter but 2 points below a year ago (52 percent). Five percent plan to reduce workers, and 45 percent say their workforce will stay about the same. A sharp overall increase of 2.8 percent is planned for the panel s average composite workforce over the next 12 months, a half-point above the 2.3 percent in the fourth quarter, and well above the 1.3 percent planned a year ago. Note that showed far greater plans than Product firms in their projected workforces (+4.4 percent and +1.8 percent, respectively.) Importantly, average increases of hourly wages for the current workforce continued at 2.01 percent, 1 basis point above the 2.00 percent of the prior quarter, and but 71 basis points lower than a year ago (2.72 percent). Product firms and Service firms plan similar 2.03% and 1.99% wage increases, respectively. Chart 4.3 Percent planning to hire Mean expected increase, hourly wages Net hiring +1.3% +1.3% +1.2% +2.3% 2.8% 2.72% 2.29% 1.98% % 5 Add Reduce 10 Add 10 Add Reduce Reduce Net hiring % +1.1% +2.3% +1.8% Mean expected increase, hourly wages 2.49% % % Mean expected increase, hourly wages Note: In 2017, n=301,, n=183,, n=118 Net hiring +1.9% +2.3% +1.4% +2.3% +4.4% % 2.02% 2.01% 1.99% PwC 23

24 Business outlook, next 12 months Percent planning to hire by type of employee What types of employees do you plan to add or reduce over the next 12 months? Over the next 12 months, 32 percent of panelists will be looking primarily for professionals (up 4 points from the fourth quarter but down 6 points from a year ago). Professionals with technology/ engineering skills are sought by 17 percent of Trendsetter companies, and 21 percent are seeking sales/marketing professionals. Twenty-six percent say they are interested in hiring bluecollar production workers (down 1 point), while 14 percent cite interest in hiring white-collar support workers (up 4 points). Middle management executives will be sought by 9 percent, and senior management by 2 percent. Chart 4.4 Percent planning to hire by type of employee 2Q 3Q 4Q 17 Planning to hire (net) 52% 41% 39% 47% 5 Professionals 38% 26% 25% 28% 32% Technology/Engineering 24% 19% 16% 18% 17% Business/Finance 6% 2% 2% 4% 7% Sales/Marketing 18% 11% 11% 14% 21% Blue Collar Workers 18% 27% 26% Skilled/Specialized workers Semi-skilled/Unskilled workers 16% 13% 15% 19% 21% 9% 9% 11% 17% 15% White collar support 12% 1 9% 1 14% Middle management 6% 4% 3% 5% 9% Senior management 1% 1% 1% 3% 2% 2Q 3Q 4Q 17 Planning to hire (net) 54% 35% 35% 43% 43% Professionals 32% 18% 15% 17% 21% Technology/Engineering 19% 1 7% 8% 8% Business/Finance 3% 1% 2% 2% 3% Sales/Marketing 18% 11% % Blue Collar Workers 28% 19% 33% 28% Skilled/Specialized workers 22% 9% 12% 21% 21% 2Q 3Q 4Q 17 Planning to hire (net) 5 47% 45% 52% 59% Professionals 45% 36% 4 42% 48% Technology/Engineering % 32% Business/Finance 8% 3% 3% 7% 13% Sales/Marketing 19% 12% 12% 31% Blue Collar Workers 1 17% 19% 18% 23% Skilled/Specialized workers 1 17% 18% 18% 21% Semi-skilled/Unskilled workers 14% 13% 16% 25% 19% Semi-skilled/Unskilled workers 2% 4% 3% 6% 9% White collar support 14% 1 8% 11% 9% Middle management 8% 6% 5% 5% 6% Senior management 3% --- 1% 2% 2% White collar support 1 9% 11% 8% Middle management 4% 2% 1% 6% 15% Senior management --- 1% --- 4% 3% Note: In 2017, n=301,, n=183,, n=118 PwC 24

25 Business outlook, next 12 months Percent planning major new investments of capital Are you actively planning any major new investments of capital over the next 12 months? If so, what percent of total sales do you expect to invest? Planned CapEx remained on pace. Twenty-seven percent of those surveyed are planning major new investments of capital for business growth over the next 12 months, similar to the prior quarter s 28 percent and same as last year s 27 percent. The mean level of investment is a 6.6 percent, below the fourth quarter s 7.4 percent, and below last year s 8.0 percent. Chart 4.5 Percent planning major new investments of capital Mean investment as a % of total sales % 6.4% 7.4% 6.6% Mean investment as a % of total sales % 6.2% 5.6% 5. Mean investment as a % of total sales 10.6% 13.4% 6.7% 10.4% 8.9% Note: In 2017, n=301,, n=183,, n=118 PwC 25

26 Business outlook, next 12 months Percent planning to increase expenditures Over the next 12 months, where do you expect to increase expenditures? In first-quarter 2017, 74 percent of panelists were planning to increase operating budget expenditures over the next 12 months, 4 points below the fourth quarter, but 3 points above a year ago (71 percent). New products or service introductions (37 percent), Information technology (28 percent), Marketing and sales promotion (22 percent), and Geographic expansion (20 percent) lead the way. Advertising was at 18 percent, R&D was at 17 percent, and Facilities expansion was at 15 percent. Business acquisitions rose somewhat to a low 10 percent while Internet commerce was at 8 percent. Percent planning to increase spending (net) New product or service introduction 2Q 3Q 4Q 17 67% 76% 76% 74% 68% 23% 22% 24% 33% 34% Information technology 19% 24% 22% 27% 18% Marketing & sales promotion 24% 29% 29% 21% Geographic expansion 24% 26% 24% 18% Advertising 19% 25% 27% 16% Research and development 11% 12% 14% 17% 16% Facilities expansion 23% 24% 15% 16% 19% Business acquisition 15% 13% 7% 5% 9% Internet commerce 8% 8% 12% 1 8% Chart 4.6 Percent planning to increase expenditures Percent planning to increase expenditures(net) New product or service introduction Percent planning to increase spending (net) New product or service introduction 2Q 3Q 4Q 17 74% 79% 75% 84% 83% 27% 32% 38% 52% 42% Information technology 26% 33% 34% 37% 44% Marketing & sales promotion 2Q 3Q 4Q 17 71% 77% 75% 78% 74% 25% 26% 3 41% 37% Information technology 22% 28% 27% 31% 28% Marketing & sales promotion 21% 24% 24% 21% 22% Geographic expansion 21% 25% 18% Advertising 23% 21% 23% 27% 18% Research and development 11% 16% 16% 18% 17% Facilities expansion 18% 19% 15% 15% 15% Business acquisition 13% 12% 7% 7% 1 Internet commerce 8% 6% 11% 9% 8% 19% 19% 17% 21% 22% Geographic expansion 18% 24% 14% 19% 19% Advertising 26% 23% 28% Research and development 12% Facilities expansion 13% 13% 16% 13% 1 Business acquisition 11% 11% 7% 1 11% Internet commerce 8% 4% 9% 8% 8% Note: In 2017, n=301,, n=183,, n=118 PwC 26

27 Business outlook, next 12 months Expected barriers to business growth Over the next 12 months, will any of the following factors represent barriers to business growth? Lack of demand remained the most-cited potential barrier to business growth over the next 12 months, cited by 57 percent of Trendsetter companies (up 2 points from last quarter but 2 points below a year ago, 59 percent). Legislative/regulatory pressures was next at 53 percent, up 5 points. Profitability/decreasing margins was 43 percent. Oil/energy prices rose 8 points to 27 percent, and Pressure for increased wages was up 5 points to 33 percent. Lack of qualified workers was up 5 points to 33 percent. Increased taxation declined sharply, down 18 points from the prior quarter to 20 percent. Strength of the US Dollar was down 3 points to 14 percent, Note the Fed raised interest rates late in the quarter (mid-march), and it was up 7 points to 18 percent. Chart 4.7 Expected barriers to business growth Lack of demand Legislative/ regulatory pressures Profitability/ decreasing margins Lack of qualified workers Pressure for increased wages Competition from foreign markets Oil/energy prices Increased taxation Higher interest rates Strength of the US dollar Lack of capital for investment '17 4Q '16 3Q '16 2Q '16 '16 Note: In 2017, 301 PwC 27

28 Business outlook, next 12 months Plans for M&A and other business initiatives Over the next 12 months, do you expect to participate in any of the following new business initiatives? Looking ahead to the next 12 months, only 35 percent of the panelists said they expected to participate in new business initiatives, down 8 points from the fourth quarter and a year ago (43 percent). Overall, the most prevalent expected initiatives were new strategic alliances (16 percent), new joint ventures (9 percent), Purchase of another business (7 percent), and bringing in new partners (7 percent). Anticipated expansion to new markets abroad was at 5 percent, same as a year ago (5 percent). 2Q 3Q 4Q 17 New business initiatives (net) 42% 45% 34% 4 38% New strategic alliance 17% 17% 12% 15% 15% New joint venture 13% 11% 1 13% 8% Purchase of another business 15% 14% 6% 5% 9% Bring in new partners 7% 6% 3% 2% 5% Sale part/all of own business 3% 4% 3% 6% 6% Expand to new markets abroad 5% 8% 5% 6% 6% Restructure debt 5% 3% 5% 5% 3% Venture capital 1% 2% 3% 2% 3% New facilities abroad 2% 3% 3% 2% 2% Angel investors 3% 3% 4% 1% 2% Private placement 1% --- 1% 1% --- IPO 1% 1% 1% 1% 1% Chart 4.8 Plans for M&A and other business initiatives 2Q 3Q 4Q 17 New business initiatives (net) 45% 5 38% 48% 31% New strategic alliance 22% 19% 23% 23% 18% New joint venture 7% 12% 1 14% 12% Purchase of another business 12% 18% 18% 1 5% Bring in new partners 11% 9% 9% 13% 11% Sale part/all of own business 5% 4% 6% 7% 4% Expand to new markets abroad 2Q 3Q 4Q 17 New business initiatives (net) 43% 47% 35% 43% 35% New strategic alliance 19% 18% 16% 18% 16% New joint venture 11% 11% 1 13% 9% Purchase of another business 14% 16% 7% 7% 7% Bring in new partners 9% 7% 6% 7% 7% Sale part/all of own business 4% 4% 4% 7% 5% Expand to new markets abroad 5% 9% 4% 5% 5% Restructure debt 4% 2% 4% 4% 2% Venture capital 1% 1% 2% 3% 2% New facilities abroad 1% 2% 2% 2% 1% Angel investors 3% 2% 2% 1% 1% Private placement 1% 1% 1% 1% 1% IPO 1% 1% 1% --- 1% 5% 1 3% 3% 4% Restructure debt 2% 1% 3% 2% 1% Venture capital % 5% 1% New facilities abroad 1% 1% 1% 2% --- Angel investors 2% 1% --- 2% --- Private placement 2% 2% 2% 2% 1% IPO Note: In 2017, n=301,, n=183,, n=118 PwC 28

29 Survey demographics and research methodology Demographics Who Leading privately held businesses in the United States Interview dates January 2, 2017 to March 31, 2017 All (301) Product (183) Service (112) Average number of employees Average business unit revenues $293 million $356 million $195 million Average enterprise revenues $350 million $445 million $204 million Five-year growth rate 88% 55% 123% Industry sectors Products 61% Manufacturing 25% Trade/Distribution 23% All other 13% Services 39% Methodology PwC s Private Company Trendsetter Barometer is a quarterly telephone survey conducted by the independent research firm BSI Global Research Inc. The survey panel consists of CEOs and their designates from a geographically balanced sample of leading private companies in the United States, as identified in the business media. PwC 29

30 pwc.com/us/pcs Contacts: Ken Esch Private Company Services Partner +1 (312) Margaret Young Private Company Services Partner +1 (864) Laurie Kelly Private Company Services Marketing Leader +1 (617) PricewaterhouseCoopers has exercised reasonable professional care and diligence in the collection, processing, and reporting of this information. However, the data used is from third-party sources and PricewaterhouseCoopers has not independently verified, validated, or audited the data. PricewaterhouseCoopers makes no representations or warranties with respect to the accuracy of the information, nor whether it is suitable for the purposes to which it is put by users. PricewaterhouseCoopers shall not be liable to any user of this report or to any other person or entity for any inaccuracy of this information or any errors or omissions in its content, regardless of the cause of such inaccuracy, error, or omission. Furthermore, in no event shall PricewaterhouseCoopers be liable for consequential, incidental, or punitive damages to any person or entity for any matter relating to this information PricewaterhouseCoopers LLP. All rights reserved. "PwC" refers to PwC LLP or, as the context requires, the PwC global network or other member firms of the network, each of which is a separate and independent legal entity. NY