Documens Boss

The US economy continues its very slow recovery through June. The Conference Board, a private research group, said its index of leading economic indicators fell 0.2 percent in June; economists polled by Thomson Reuters had expected a drop of 0.3 percent.
 
Since April 2009, the leading indicators gauge had risen almost every month as the economy rebounded from recession. It was driven higher by the increasing amount of money in the economy, the rebound in manufacturing and slow improvements in the job market. However, weakness in the housing sector, faltering consumer spending and high unemployment have all raised fears about a big slowdown in growth.
 
Conference Board economist, Ken Goldstein, said, "The indicators point to slower growth through the fall". He added that the manufacturing rebound will likely slow and that there is "little indication" of an improvement in the service sector, which employs about 80 percent of the U.S. work force.
 
Overall, five of the 10 indicators increased, while 4 declined and an estimate of manufacturers' new orders for capital goods was flat. Negative employment data - fewer hours worked in factories and more people filing for jobless aid - weighed down the index, as did dropping stock prices. The biggest positive contributions were the money supply, which increased, and the difference between 10-year interest rates and the overnight interest rate that the Federal Reserve has kept at a record low, near zero. A wide gap between the two can mean investors expect economic activity to pick up. Still, that gap has narrowed recently as investors searching for safety bought up 10-year Treasuries, weighing on bond yields.
 
Considering this slow economic improvement, the ECM, BPM sector, however, seems to be faring quite well. Most companies report progress in 2010, from both a revenue and earnings perspective. Whilst not aspiring to be an empirical study, we list below some general trends we are witnessing:

• BPO and service companies seems to be doing very well; the economy has caused more outsourcing, including some mission critical processes

• Small to medium ECM companies who are “fast on their feet” are growing and building new customer bases

• Application and domain knowledge are helping ECM companies grow with specific vertical application sales
 
• The largest vendors seemed to be relegated to the very largest enterprises; we see some revenue and earnings challenges here.
 
 
From an M&A perspective, this is the most active market we have seen in a decade. There are many opportunities available on both the buy and sell side. Best news of all, is that valuations are holding very close to historical averages.