City Comment

From The Publican

Start a new threadBy Hamish Champ , 05-Nov-2006

Related topics: Company & City News

Research studies into business practices are part and parcel of the world we live in. But does anyone actually pay much attention to the findings? I pose the question after seeing a recent study which suggested that nine out of 10 companies in this country are "underperforming and unable to achieve sustained growth in revenue, profit and share price".

 

Apparently 56 per cent of those polled believed that creating organic growth is going to get harder in the next three years, with half of this lot fearful that their capabilities to achieve organic growth aren't strengthening.

 

These nuggets have been unearthed by consultants Mercer Delta, who highlight that growth "by merger or acquisition is risky and does not deliver the promised value to shareholders". Really? Tell that to Greene King.

 

Mercer's "growth champions" are those businesses that, against even their own expectations, have grown consistently in terms of sales, earnings and cashflow - and at twice the rate of the rest. They have "created clarity on their sources of growth" and have "understood and articulated their profit models well". Not only that, but they "built leaders from within, rather than recruiting 'heroes' from the outside world".

 

The pub trade is certainly mindful of the need to raise its game by improving growth from within existing businesses, especially if one thinks target prices are becoming unreasonable. As competition for consumers' cash intensifies retail standards just have to rise, no question.

 

But when times are tough and costs rising, synergy benefits obviously become attractive. Plus there's nothing like a few deals to generate some warm feelings in the Square Mile, viz share prices.

 

Does this mean the acquisitive groups are on a boom and bust cycle? Not necessarily. But things will become really interesting when the supply of suitable takeover targets dries up.

Find us on Facebook

Spotlight

Q&A: New pub food allergy requirements

Q&A: New pub food allergy requirements

Whether or not you serve food in your pub, the balance between your culinary and administration skills...

5 of the Best Summer Drinks Trends in 2014

5 of the Best Summer Drinks Trends in 2014

Being obsessed with the weather is a very British thing. However, sunshine sells drinks, so it’s also...

BBQ menus ideas for pubs
Expert Insights

Expert Insights - BBQ Menus

Elliot Kuruvita looks at BBQ menu ideas from this year’s British BBQ Battle finalists

Morning Advertiser Jobs: The new online job board for the licensed trade

Morning Advertiser Jobs: The new online job board for the licensed trade

The Publican’s Morning Advertiser has launched a new online platform with everything you need to know about...

Follow us on