High growth businesses still on course despite the pandemic, says ECI Growth Index
High growth UK companies have continued their trajectory in 2020 despite the pandemic, displaying resilience in the face of the economic disruption that’s taken place this year, according to the Growth Index released today by midmarket private equity firm ECI Partners.
Two thirds (65%) of growth businesses expected to continue their growth trajectory in 2020 even after the pandemic had begun in March – and nearly half of these (44%) expect to deliver double digit growth of 11% or more. A majority (70%) of technology, media and telecoms firms expected to grow in 2020, followed by healthcare (66%) and business services (65%).
Tom Wrenn, partner at ECI Partners said: “It is encouraging that the UK’s fastest growing businesses are bullish about their growth prospects. This year has stress-tested companies’ business models in terms of resilience in myriad unforeseen ways as UK companies were hit with the impact of Covid-19, lockdowns and restrictions. We need our growth businesses to help us find the path to recovery after the economic hibernation of 2020. The fact that so many of them are feeling confident about their growth prospects is great news for the UK’s all-important mid-market.”
Other key findings of the Growth Index include:
- The ECI Growth Index also benchmarks business resilience (a business’ resilience score was assessed by the impact that Covid-19 has had on its revenue projections). Among fast-growing UK companies this year, the TMT sector proved to be the most resilient with 80% of businesses proving to be resilient, followed by business services at 74%. Despite a tough year, 72% of consumer-focused businesses also proved resilient to the effects of the crisis;
- Looking to future growth, 84% of fast-growing companies expect their growth to be underpinned by expanding internationally in the next 12 months (53% expect to grow into Continental Europe, 43% in North America, 36% in APAC, 31% in South America and 27% in Africa). It was found that businesses without an international presence were three times less likely to be classed as resilient;
- Growth businesses do not see Brexit as a key concern when thinking about their future. Less than a quarter (23%) are prioritising Brexit among the short-term concerns facing their business (compared to changing pandemic guidance at 40%, global economic downturn at 35% and lack of customer/client spending at 30%)
Tom Wrenn continues: “Tech players have proven to be the most resilient but it was positive to see how businesses across all the sectors fared, given the challenges under which they have operated. With the majority of the businesses we work with operating internationally, we can see the positive impact of diversified global revenues on business resilience. International midmarket businesses can play an important in the UK economic recovery. Brexit not being deemed as a top priority for firms is surprising yet encouraging for the post-Brexit world we will soon be faced with. It is a positive sign, but whether this is because it has simply been superseded by prevailing ‘known’ threats will play out in the coming months.”
“While we can’t predict what the future holds for businesses, what we do know is that there will be real value in companies that can show that they treated their customers and people fairly, faced adversity head on, and demonstrated both growth and resilience in a year of unforeseen challenges.”