With all of the talk of large bankruptcy filings, Sageworks released a list of 10 types of private companies that are most likely to file for bankruptcy in the coming months. The list is based on the average debt-to-equity ratio in the industry over the last 12 months. A high debt-to-equity ratio generally means that a company has been aggressive in using debt to finance growth. 

According to Sageworks’ industry data (shown below), privately-held companies have been taking on more debt relative to their sales and assets during the time period from 2003-2008. Liabilities to sales have climbed steadily from 1.03 at the beginning of this period to 3.30 in 2008.

Sageworks Inc. collects privately-held company data from financial professionals who subscribe to its Profitcents and Sageworks Analyst programs.  When financial reports are run through these programs, the data is collected and stored in anonymity. Industry data is provided in an aggregate format only, and no individual company information is released. Over one thousand reports are run daily, and new data is incorporated into the Sageworks industry statistics each day.

For more information on the increase of business debt and the impact of debt on the economy, visit:

• http://www.financialsense.com/editorials/hodges/2005/0619.html
• http://www.sba.gov/advo/research/rs327.pdf - “Small Business and Micro Business Lending in the United States for Data Years 2006-2007.”
• http://blog.washingtonpost.com/small-business/2008/06/number_of_small_business_loans.html - “Number of Small Business Loans Increase.”