How some companies bounced back after 2008 financial crisis

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New Delhi  As another economic downturn is underway due to the COVID-19 pandemic, global management consulting firm Boston Consulting Group (BCG) has drwan out lessons that business leaders can learn by looking at the some of the top public companies which came out storoner after the 2008 financial crisis.

All of these companies took a common set of steps: act proactively, increase vitality, set a clear vision, build resilience, and streamline the organisation, said the report.

During the 12-year period, the top performers went through four phases: managing turbulence, stabilising, revving up, and continuing to accelerate.

“A key to these companies’ success is that they tailored their approach to macro conditions,” said the report titled “Crisis Can Spark Transformation and Renewal”.

For example, during the first phase — managing turbulence — the 25 top companies that made it to the BCG list were far more likely to hoard cash and maintain liquidity than companies in the S&P Global 1200 index.

Cash and cash equivalents made up nearly 20 per cent of each company’s total assets, whereas the average for companies in the index was less than 10 per cent.

Similarly, when revving up, the best performers capitalised on economic tailwinds and relentlessly sought growth.

From about mid-2012 through about mid-2016, these companies grew by an average of 19.5 per cent, even as the index fell, reflecting a decline in companies’ growth (due to a sluggish global recovery).

And starting in 2016, the top 25 turned their focus to innovation and making acquisitions with growth potential — in some cases drawing down their cash to fund expansion.

Thus, the top 25 companies took more conservative actions during the depths of the crisis and then focused relentlessly on growth once the worst had passed.

To identify the companies that performed the best worldwide from 2008 through 2019, BCG evaluated earnings before interest, taxes, depreciation, and amortization (EBITDA) and total shareholder return (TSR) for companies in the S&P Global 1200.

Among them, Regeneron Pharmaceuticals, Abiomed, Booking Holdings, Skyworks Solutions and Mastercard are the top five companies.

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