How can M&A deal with today’s demands while activating your digital tomorrow?
Actively managing the present and anticipating the future defines new M&A strategies. The words actively and activating are carefully chosen. You may have also picked up on the subtle reference to activists — their growing influence is here to stay and spreading geographically. Also, private equity, while not necessarily included in the activist category, is growing significantly in prominence.
C-suites need to manage today as much as prepare for tomorrow. There is greater confidence in global economic growth than at any time since the global financial crisis. This welcomed and long-awaited scenario creates new intense expectations. It requires an even keener focus on organic and inorganic growth, as well as cost efficiency to meet rising investor demands.
Managing today’s broad range of stakeholder groups is also an accelerating demand on the C-suite. If you have any doubt, just speak to a company with activist shareholders. At the other end of the spectrum, and perhaps most compelling, is the new necessity to clearly articulate deal rationale centered within the concept of inclusive growth. Cost savings alone will no longer justify the “purpose” of a deal.
At the same time, the future is approaching faster than anyone anticipated. Digital disruption, transformational shifts in customer preferences and sector convergence are forcing companies to make bets on future technology now. The technology sector itself is transforming into a gateway to all industries.
And yes, geopolitical concerns are significant. But C-suites are managing these risks, not being managed by them.
The net result of all this is the most exciting and challenging business environment many of us have ever seen. In fact, our study forecasts an increase in cross-border M&A.
As for M&A, the main topic of our Global Capital Confidence Barometer, the message is clear — M&A is more important than ever to growth and survival.
Following current customers and winning new ones means companies are evaluating an unprecedented range of deals. This includes broader types of deal structures, business models and geographies as executives look to preserve current value and future-proof their businesses.
Don’t be deceived by short-term market measures or the headline appeal of megadeals. One week, one month or one quarter doesn’t tell the story. Dollar value of deals won’t always tell the story either — many that are strategically important for tomorrow will not be megadeals. As our survey suggests, this is an environment that supports continued, long-lasting strength in the M&A market.
The real M&A story is below the headlines and answers this question — can your deals actively manage today while activating your digital tomorrow?
Questions executives should ask themselves to drive better M&A in today’s deal economy
Are you able to take near-term advantage without losing strategic discipline?
The near-term pickup in the global economy offers one solution to demanding shareholders. But fundamental shifts across all sectors mean that companies should be looking for sustainable long-term value creation via acquisitions, alliances and investments, as well.
Is your portfolio fit for purpose?
In a rapidly evolving environment of disruptive change, companies should increase their ability to refocus their core assets to proactively respond to emerging opportunities. Real-time monitoring of performance across all assets will highlight where to invest as well as those to sell.
Are activists the best warning sign for strategic reinvention?
Activists investing in a company can be an early sign of value opportunity. Companies should engage fully and early with onboard investors to understand the concerns — and be willing to pivot if required.
Can private equity become the partner of choice in dealmaking?
With PE changing investment models, holding assets for longer and looking beyond financial engineering to operational value creation, corporates and PE should consider when to compete and when go to market together on deals.
Do you know who will be the main competition in the future?
Technology, digital and customer demands are accelerating sector convergence and inventing new markets at an increasing pace. But technology is just a gateway. Understanding these new ecosystems in real time is critical. Companies should identify potential new partners and targets early enough to ride the new waves of value creation.
Are you open-minded to multiple futures, without being constrained by outdated thinking?
New industrial landscapes and business models are evolving and morphing. Companies should consider using corporate venture capital to invest in portfolio start-ups and disruptive challengers to open up a variety of potential avenues of future growth.
Is your growth inclusive?
The corporate world has been reinvented over the past three decades. Globalization and technology have reshaped the workplace. Companies will need a well-articulated inclusive growth strategy and narrative to demonstrate that value is being created for all stakeholder groups. If they do not, they risk a backlash from customers, communities and policy makers.
Do you have a global mindset?
Fears over potential trade barriers, driven by economic nationalism, may appear to undermine globalization. But with supply chains and customers increasingly global, companies should be even more open to cross-border operations.
Global Vice Chair
Transaction Advisory Services
+44 20 7980 0346
Download global report (PDF) Press release: The digital transformation race and rising economic confidence to drive more M&A
Watch Steve Krouskos talk emerging M&A trends
Video: Watch Steve Krouskos talk emerging M&A trends.