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Financing Growth in Uncertain Times

How to determine whether the time is right to plan for strategic growth, funded by debt or equity.

By Steve Woods | January 28, 2020 at 01:36 PM

Corporate leaders today sit at a crossroads. Continued economic prosperity has led to favorable business conditions, which have many companies poised for growth. On the other hand, speculation that the business cycle may have hit its peak—coupled with talk of an economic downturn on the horizon and political uncertainty over the course of this election year—has even the most optimistic CEOs and CFOs carefully weighing any expansion plans.

The number-one question many business leaders are facing: Is now the time to take on debt to finance growth? My answer: Given the cost of capital and the still-strong U.S. economy, there has rarely been a better time to implement a well-thought-out strategic growth plan.

In today’s market environment, interest rates and the cost of debt are near all-time lows for companies looking to borrow to fund operational expansion or to make a strategic acquisition. The market is awash in cash and looking for places where it can be invested. Corporate valuations are still at record levels for organizations looking to sell or divest part of the business. Despite slowing global growth and trade uncertainty, overall economic activity remains strong, except in some parts of the manufacturing sector.

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