Is it possible to take advantage of a recession? In Businomics, I wrote about AirTran, which left the 2001 recession in a far stronger position than it entered it. McKinsey Quarterly published an article back in 2001 called "Learning to Love Recessions," that shows how companies can use a recession to their advantage. (This article is normally in McKinsey’s premium content section, but they have generously offered free access with free registration; no obligations; click here for access.)
Here are a couple of key takeaways: top companies made fewer acquisitions in good times, but more acquisitions during recessions. Deal size for top companies was larger in recessions, too.
Top companies went into recessions with more cash, but used their cash, plus borrowed funds, to acquire weaker competitors, buy used equipment or build market share.
If you are already leveraged to the hilt, it’s too late to take this advice. But if you’re a conservative business leader, whose balance sheet is healthy now, it’s probably time to be bold. Look for the weak companies, and acquire at least some of their assets at cheap prices. The economy will turn around, and you’ll be better off with more capacity purchased for cents on the dollar.