“[Deals] are nonetheless shifting, however they’re shifting at a tempo that we noticed throughout the pandemic. It is simply very, very sluggish, in order that’s additional impacting firms of their money movement cycle. I believe that is, sadly, a brand new norm, and it is possible going to proceed by the 12 months’s finish and into subsequent 12 months. So, firms actually should take into consideration all their choices.”
Transferring the ‘gentle swap’ from progress to profitability
As rates of interest rise and customers pull again on spending, CPG firms are struggling to boost sufficient cash to maintain their enterprise open, and bankers and traders are extra cautious about lending, she stated.
“The meals and beverage trade notably has confronted an enormous capital crunch this 12 months, and it would not look like it should enhance in a short time,” Palmer stated. “It has been a troublesome 12 months for a couple of causes, together with … the influence of inflation and [reduced] shopper spending, and margins are lowered… Many companies are additionally lacking their prime traces, and firms want financing, however the banks are tightening their lending requirements. Fairness may be very onerous to come back by, and debt is pricey … as a result of rising rates of interest.”
In response, CPG firms have shifted away from putting higher significance on progress to now prioritizing profitability, she stated.
“For the longest time period, it was all about top-line progress, and I do not need to say progress in any respect prices, however that was definitely the precedence. Then this gentle swap went off, after which rapidly, it was path to profitability,” she added.
