Private Company Likelihood of Default Improving; Companies May Be Positioned to Borrow
by Terri Eyden on
On May 28, Sageworks released its latest Private Company Report, a monthly update on the health and state of privately held US companies.
According to the report, private companies continued to grow at a healthy pace and experienced strong profit margins in the most recent period. Companies filing annual statements between November 2012 and April 2013 reported annual sales growth of about 10 percent. On average, these companies also reported net profit margins close to 7 percent, a full two percentage points higher than the previous year.
In an analysis focusing on seasonal industries, several "summer industries," such as restaurants and sporting goods stores, have posted higher sales growth rates during the past year than they did previously. Others, including gas stations, have seen a sharp drop in annual sales growth compared to last year.
Sageworks Chairman Brian Hamilton pointed out that the average probability of default for private companies appears to be headed in the right direction. "Despite this improvement in creditworthiness, companies appear to be taking on less debt than a year ago," Hamilton said. "The improvement in default rates coupled with healthy sales and profitability show that private companies may be well positioned to borrow."
Sageworks' monthly report on the state of privately held companies in America includes metrics on the average US privately held company as well as the performance of notable sectors and industries. Access the full report, including sector breakout and further analysis.
Sageworks is a financial information company based in North Carolina that provides risk management solutions to financial institutions. Sageworks' data and applications are used by thousands of financial professionals across North America. The company has been named to the Inc. 500 list of the fastest-growing privately held companies in the United States and to Deloitte's Technology Fast 500.