LEADERSHIP INSIGHTS

High-profile cases of corporate failure have dominated media headlines, overshadowing the long-term implications of the financial crisis for charitable, not-for-profit and voluntary organisations. The third sector not only employs vast numbers but contributes significantly to firms ability to meet critical corporate social responsibility objectives. Imminent cuts in public spending and the increased difficulty to secure private sector funding and sponsorship will take its toll on third sector organisations. How will these organisations cope with the challenges that the recession has created and what, if any, are the opportunities for leaders in this area. 

News of France, Germany and, more recently, Japan's, return to growth should provide the UK with some hope that the end of recession is in sight. Indeed, last week's reports of recovery in these European markets prompted a rise in the FTSE 100 Index with traders anticipating that improvements in the French and German economies would have a positive impact on the UK market. However, not a week later and the markets are, as the papers say, 'gripped with fear' over the sustainability of rapidly rising share prices. It raises the question of when the UK will see a solid and sustainable return to growth. And why Britain's european counterparts seem to be creeping ahead when it comes to economic recovery.   

What does the future hold for private equity? In the context of the downturn, PE houses will clearly have to adapt. There is no longer room for firms only looking for a quick exit and although some investors will continue their dedication to PE investment, leaders of private equity-backed businesses believe that most investors will reduce their commitment to these funds. Will we see private equity firms become more specialised, niche players? Will changes across the market be long-term or just temporary, allowing private equity to ride out the storm?

Following last week's focus on the future of AIM, this week we explore the small-cap market. It's a difficult time for companies on the main market at this level of capitalisation, not least because investors are looking towards blue chips as a safer option. To survive in the current climate, small-caps need to be open and honest with investors, as well as proving they have a strong and sustainable business plan. Having a long-term view may be difficult with the immediate challenges of a recessionary market, but successful companies will be those who are planning for future investment now as well as the immediate support needed to survive the downturn.  

So what should leaders of small-caps be doing to ensure their long-term survival? Reputation clearly plays a crucial role in how well organisations leverage investment through the market. As Rob Woodward, CEO, stv group plc comments: "Above all, the market needs the comfort of a healthy balance sheet, a clear and simple strategy with tangible signs of growth, a relentless focus on operational detail and a respected management team. Put these ingredients together and you will be rewarded by the markets when we come through the recession."