Capstone Partners Reports: Female Executives Prioritize Market Expansion to Drive Business Growth, Show High Preparedness for M&A

Rhea-AI Summary

Capstone Partners has released its 2024 Women Entrepreneurs Study, analyzing over 200 female business owners in the U.S. The study reveals that 59% of women CEOs prioritize market penetration, and 53.8% focus on expanding their product or service portfolios. While only 18.1% have engaged in M&A activities, 36.7% are considering it as an exit strategy, with 64% of CEOs aged 18-34 being approached by sponsors. Preparedness for exit is higher than perceived, with 74.8% completing at least one preparation step. Major concerns include inflation (55%) and customer retention (35%). Funding challenges persist, with only 6.1% of VC deals in 2023 going to female founders, and average deal sizes significantly smaller than those for male counterparts.

Positive

• 59% of women CEOs prioritize market penetration.
• 53.8% of female CEOs focus on expanding their product or service portfolios.
• 36.7% of women CEOs are considering M&A as an exit strategy.
• 64% of female CEOs aged 18-34 have been approached by sponsors for acquisition.
• 74.8% of female CEOs have taken at least one exit preparation step.

Negative

• Only 18.1% of female entrepreneurs have engaged in M&A activities.
• Inflation is a major concern for 55% of female CEOs.
• Customer retention is a significant concern for 35% of female CEOs.
• Funding challenges persist, with only 6.1% of VC deals going to female founders in 2023.
• Average VC deal size for female founders is $3.1 million compared to $9.4 million for male founders.

BOSTON, May 15, 2024 /PRNewswire/ -- Capstone Partners, a leading middle market investment banking firm, released its inaugural 2024 Women Entrepreneurs Study, which analyzes the responses of more than 200 female business owners across the U.S. for key findings related to business decisions, growth strategies, and legacy expectations. By comparing the survey results to Capstone's annual Middle Market (MM) Business Owners Survey, the report seeks to identify and elevate key differences and challenges that female founders face.

Women entrepreneurs' current growth strategies have largely included organic initiatives, with more than half increasing market penetration (59%) and expanding product or service portfolios (53.8%). Of note, market penetration tactics have been more pertinent to women CEOs compared to the broader MM business owner audience, of which only 47.5% have increased market penetration.

Regarding current growth strategies, only 18.1% of women entrepreneurs have enacted inorganic initiatives through M&A. However, M&A as an exit strategy is likely to be more prevalent, with 36.7% considering a merger or acquisition. This is especially true for women CEOs aged 18-34, as many plan to participate in multiple business ventures throughout their careers. Among female CEOs in this age group, 48% have considered M&A as an exit strategy compared to 33.6% of 35 to 54-year-olds and 17.9% of 55+ year-olds. Elevated private equity interest in businesses owned by Gen Z founders may have also contributed to 18 to 34-year-olds' M&A exit considerations. Nearly two-thirds (64%) of women CEOs ages 18-34 have been contacted by a sponsor looking to buy their company.

According to our results, women entrepreneurs are more prepared for an exit than they perceive. When prompted directly, 43.3% of female CEOs noted they have started to plan a business exit. However, when provided a list of exit preparation steps, 74.8% identified that they have completed at least one step. Many women entrepreneurs have built a strong executive leadership team (37.1%), determined financial needs (34.3%), and maximized growth strategies (31.9%) in 2023 to prepare for a future exit.

When it came to top concerns for the future growth of their company, inflation headlined the chart, comprising 55% of responses. Customer retention was the next highest concern at 35%. These figures mirrored the top two concerns in Capstone's MM Business Owner Survey. At the same time, increased workload or stress appeared third on female founders' list compared to seventh for overall MM business owners. Funding for growth and credit availability were also more heavily weighted.

Nearly one in four respondents to Capstone's WE Survey indicated that they required help raising debt and equity capital. The absence of growth funds allocated to female founders and the lack of sizeable loans approved for women-owned businesses are known hurdles for women entrepreneurs seeking to expand their business operations. Access to early-stage, or venture capital (VC), funding has been historically low for women, with incremental gains over the past 15 years. In 2008, 3.4% of VC deals went to female-founded companies compared to 6.1% in 2023, according to PitchBook. In addition to limited deal volume for female founders, the average deal size remains far below those awarded to male counterparts. In 2023, the average VC deal value for male-founders was $9.4 million compared to $3.1 million for female-founders.

Also included in this report:

• An overview of the current size and growth of women-owned businesses in the U.S.
• Key findings on female executive's business operations and strategies.
• Commentary on the challenges women face around credit availability and fundraising.
• Commentary and Q&A from select Capstone advisors on key service areas that women business owners identified as areas of interest or demand.

To access to full report, click here.

ABOUT CAPSTONE PARTNERS

For over 20 years, the firm has been a trusted advisor to leading middle market companies, offering a fully integrated range of investment banking and financial advisory services uniquely tailored to help owners, investors, and creditors through each stage of the company's lifecycle. Capstone's services include M&A advisory, debt and equity placement, corporate restructuring, special situations, valuation and fairness opinions and financial advisory services. Headquartered in Boston, the firm has 175+ professionals in multiple offices across the U.S. With 12 dedicated industry groups, Capstone delivers sector-specific expertise through large, cross-functional teams. Capstone is a subsidiary of Huntington Bancshares Incorporated (NASDAQ:HBAN). For more information, visit www.capstonepartners.com.

For More Information Contact:
Sarah Doherty
Director of Market Intelligence
sdoherty@capstonepartners.com
617-619-3310

View original content to download multimedia:https://www.prnewswire.com/news-releases/capstone-partners-reports-female-executives-prioritize-market-expansion-to-drive-business-growth-show-high-preparedness-for-ma-302146709.html

SOURCE Capstone Partners

FAQ

What are the main growth strategies for female CEOs according to the Capstone Partners' study?

The main growth strategies include increasing market penetration (59%) and expanding product or service portfolios (53.8%).

How many female CEOs are considering M&A as an exit strategy?

According to the study, 36.7% of female CEOs are considering mergers and acquisitions as an exit strategy.

What percentage of female CEOs aged 18-34 have been approached by sponsors for acquisition?

64% of female CEOs aged 18-34 have been approached by sponsors looking to buy their company.

What percentage of women entrepreneurs have completed at least one exit preparation step?

74.8% of women entrepreneurs have completed at least one exit preparation step.

What are the top concerns for female CEOs for future growth?

The top concerns are inflation (55%) and customer retention (35%).

How does the average VC deal size for female founders compare to male founders?

In 2023, the average VC deal size for female founders was $3.1 million, while for male founders it was $9.4 million.