- The Find: Thought the worst of the big bankruptcies was over? Bain & Company is predicting that the number of bankruptcies of companies "with $100 million or more in assets will approach 100 in 2010."
- The Source: The Bain CRG Fall Default Outlook.
The bottom line: "the study estimates bankruptcies next year to surge into the 95-120 range, an upward forecast," with the "retail and other consumer-cyclical sectors highest on the endangered species list." 2010 could see a further 100 big companies fall.
Sam Rovit, author of the study and managing partner for Bain CRG, concludes: "The body blows to industry supply chains will keep on coming into 2010. Because of the lag time between macroeconomic factors and defaults, our study finds that a painful business shockwave will extend further into the future than originally thought."
What does this mean for your company? If your balance sheet is strong, Bain is advising you "to rein in spending and gradually begin to acquire assets to improve their competitive position," and be wary of buying too early. "Most companies would be advised to sit on the sidelines for the time being because heavy weather is here for a while and asset values will continue to drop," says Rovit. If you're facing a weak balance sheet but have strong competitive position, think about "cutting costs, divesting non-core assets, building cash and protecting liquidity."
The Question: Is anyone brave enough to predict who will be the next to fall?