Ernst & Young’s Pendulum Of Stress, and Other Year End Doomsday Predictions

Only 44% of companies surveyed said they’re performing at “successful levels,” according to a survey released today by Ernst & Young. I quite like the Pendulum Of Stress they use, if not for the dramatic name, for the visual effect of showing relationships between various stages of performance and cash flow/burn. (View it after the jump)

According to the study, half of the respondents said their companies are stressed or distressed. Those companies are divesting business units, restructuring, or closing facilities.

That’s right in line with comments I’ve heard from turnaround investors who say, last year, their deal flow consisted of retail, automotive, and building products companies. Nowadays that’s expanded to include every sector, even stable-looking sectors like health care and energy.

Around this time last year, talking heads were predicting “The Year of the Strategic Buyer,” an idea that’s taken a back seat to the “Year of Bad Earnings” for would-be buyers. I’ll throw that prediction in the Wishful Thinking box alongside “Lending Markets Will Open Up In Q3 of 2008.”

There’s one other noteworthy piece of info and that’s fundraising data. Despite everything said about the fundraising market, PE firms managed to raise 36% more funds in the first three quarters of 2008 than in the first three quarters of 2007. Fat chance of that happening in 2009.

Read the rest of the survey’s findings here.