News

Issues and events that shape Long Island's economic and legislative landscape.

Sunday, November 23, 2014

ACG NY Survey: Dealmakers Hold Mixed Views On LI's Economic Vibrancy

Middle-market dealmakers and their advisors on Long Island hold mixed views about the Long Island economy's performance this year, according to survey results issued today by ACG® New York, the area''s leading association of dealmaking professionals. 

A majority of the capital providers, investment bankers, attorneys, accountants and other consultants say the Island's economy is stable and will finish the year the same as at the start.  But a sizeable minority are worried or pessimistic, saying that the economy is in decline, that it''s an even bet that it will get worse by year end and that a recession is possible before next year. 

The written survey was conducted in January by ACG New York of attendees at its annual Economic Update breakfast held at Hofstra University in Hempstead, N.Y., and of attendees at previously held ACG New York Long Island events.  The nonprofit association received 59 replies from private equity executives and investment bankers (20%), lenders (29%), and corporate executives (4%), as well as from professionals who provide services necessary to close transactions (38%). 

"We believe attendees at our Long Island events reflect a cross-section of the Long Island business community," says Barry Garfield, head of ACG New York's Long Island Committee and managing partner at Melville-based CPA firm Holtz, Rubenstein, Reminick.

A substantial majority of  the respondents replied to the survey by saying that the Island''s economy is "stable" (66%).  But a noticeable 32% said it is "declining."  Only a few (2%) said the economy is "growing."  Of the 59 survey respondents, 56 replied to this question, for a response rate of 95%.  .

A majority (59%) also said that Long Island''s economy at the end of 2013 will be "about the same" as at the end of 2012.  A sizeable 24% also said it will be better or much better.  However, 18% replied that it will be worse or much worse. 

A majority (54%) of respondents said that it is unlikely that Long Island will enter a recession in 2013.  However, 46% said either that the odds are 50-50 that it will do so or that it is likely or very likely to do so.

Respondents also split on whether and how the unemployment rate for Nassau and Suffolk counties will change at the end of 2013 from the sizeable 7.1% rate reported in November 2012 by the NY Dept. of Labor (the latest figure available at the time of the survey).  A substantial majority (74%) said the rate will either be unchanged (31%) or lower (43%).  But a total of  57% say the rate will either be unchanged (31%) or higher (26%). 

Asked what their firm's performance would be on the Island this year, the response was noticeable less than bullish.  Only 47% said that the volume of their firm's Long Island transactions would increase during 2013 from 2012.  Meanwhile, 42% said the volume would remain the same, and 11% said it would decrease. 

They appeared somewhat more optimistic about their firm's Long Island employment.  Although a  majority (53%) said it would remain the same as at the end of 2012, another 30% foresaw an increase.  However, a noticeable 18% foresee a decrease.  [The total adds to 101% due to rounding.]

What segments of the Long Island economy do the dealmakers say will contribute the most to the Island's growth in 2013?  Asked to select the two local industries that will provide the greatest growth, they most often selected Healthcare (37%) and Pharma/Bio (24%), followed by Construction (17%) and then Media (including digital and information services) (5%).  .

Fiscal Cliff Compromise

They saw the compromise as being overall economically undesirable for New York State (55%), compared with 45% who saw it as being overall economically desirable. 

An even greater percentage (58%) saw the compromise as being overall economically undesirable for Long Island, compared with 42% who saw it as being overall economically desirable.     

As for their view of how the compromise affected them, 59% of the dealmakers said it was economically undesirable for themselves, while 41% said it was economically desirable for them.   

Background

Respondents identified themselves as working principally in these industries:  Service provider (38%), Lender (29%), investment banker (16%), other (7%) private equity (4%), corporate (4%), and media (2%).  Service providers typically comprise law, accounting, valuation, and insurance.  No venture capital executives or limited partners were among the respondents. 

The respondents identified themselves as having the following positions/titles within their companies:  Senior vice president (30%); Partner (23%), Vice president (15%), Principal (8%), Director (8%), Other (6%), Managing director (4%) CEO (4%), CFO (2%), Associate (2%)   [Adds to 102% due to rounding. ]

Based on responses of 54 people, the respondents primarily live  in Suffolk (41%) and Nassau (46%) Counties.  The remaining  13% live in Westchester County, N.Y. (6%); Fairfield County, Conn. (4%);  New Jersey (2%); and Boston, Mass. (2%). 

Most of the respondents (68%) work in Suffolk (32%) and Nassau (30%) counties or a combination of the two (6%).  Another 20% work in Manhattan (New York County). 

View survey results in chart form 

About ACG New York

ACG® New York (www.acgnyc.org), founded in 1954, is the leading membership organization in New York that facilitates relationship building and focused education for middle market deal-making professionals.  Each year over 8,000 professionals participate in ACG New York' s 70+ networking and educational events in New York City and Westchester and on Long Island, including healthcare, manufacturing & logistics, and retail conferences. 

Capital-Connection® and Deal-Source® events put buyers together with funding sources in scheduled private meetings.  The organization''s annual Champions Awards recognize the year''s outstanding middle market firms and deals, while its Education Cup competition honors the best graduate business school team from the New York City area for M&A counseling prowess.  In March the organization will hold a panel on the successful intergenerational transfer of leadership within family businesses, featuring the leaders of three Long Island-based businesses—P.C. Richard & Son, ClearVision Optical Company, and Inter-County Bakers, Inc.  These and other programs have spurred ACG New York''s rapid growth in recent years, with membership now exceeding 1,000.