Deals take center stage as companies reinvent their corporate strategy in response to a permanently reshaped landscape.
Everything is changing for executives — except the expectations of their investors and stakeholders around higher growth and returns. Profitable growth is a mainstay demand of business.
The list of what is changing includes unprecedented technological advances, the blurring of sector lines, uneven geographic growth, workforce dynamics and more geopolitical uncertainty. These changes are compelling companies to reinvent and rethink their strategy.
This strategic reset is drawing executives to the deal table. While organic growth remains important, our latest Barometer finds a near-record 57% of companies actively pursuing acquisitions in the next 12 months, pointing to an M&A uptick in 2017.
But this is a very different type of deal table. The menu of choices is broader — joint ventures (JVs), alliances, partnerships and industrial mash-ups are all options. And the availability of information and data is enabling earlier and richer assessment for transactions of all types.
Regardless of the deal structure, what assets are executives looking to acquire? Creative disruption is now part of the fabric of business life. As a result, companies are actively searching for the innovation necessary to reshape growth.
Smaller, smart deals are in pipelines as executives look at a variety of options rather than a plain-vanilla approach to their investment strategy. Startups and fast growth tech innovators are in the crosshairs.
Of course, traditional deal challenges remain, but many others have emerged in this new environment. As sector convergence increases, the integration of assets outside a company’s traditional core is far from straightforward, requiring customer-centric,bespoke solutions. Additionally, the rise of nationalist politics adds a new layer of complexity to cross-border investment strategies and deal assessments.
Despite the challenges, companies are coming to terms with the undeniable fact that preserving their cutting edge requires a sharp focus on acquiring innovation and competitive advantage. The deal table has been permanently reset, but it will be fullin 2017.
Five key questions for growth
With the deal table permanently reset, these are the better questions all executives need to ask themselves to enhance their growth strategy in today’s market:
Are you capitalizing on the breadth of deal structures to realize your strategic objectives?
Amid unprecedented change, many companies have to reinvent themselves fast — organically and through inorganic investments. Beyond traditional M&A, JVs, alliances, partnerships and industrial mash-ups are emerging as alternatives to effectively secure deal value.
Will geopolitical challenges derail your growth strategies?
Political uncertainty is increasingly affecting global trade and credit markets. Executives who do not proactively consider or effectively respond in their approach to dealmaking run the risk of poorly executed growth strategies.
Are you using analytics and big data to bring greater clarity to increasingly complex deals?
Complexity around the deal table can be simplified through the use of transaction analytics. Companies are looking at an increasing number of targets, often in unfamiliar industries. With multiple stakeholder considerations, accessing the skills needed to answer complex capital strategy questions is an imperative.
Is an off-the-shelf approach to integration the best recipe for success?
Realizing full transaction value has historically been difficult to achieve. With the pace of dealmaking intensifying and front-end customer experiences now as much a strategic consideration as back-end cost synergies, integrating assets is more complex than ever.
A disciplined, C-suite-sponsored integration strategy unique to the deal scenario is crucial.
Are you enhancing or destroying the value of acquired innovation?
The rapid rise of new ways of doing business, predominantly through digital channels and unique ways of utilizing labor, is fueling dealmaking aimed at securing innovation. Companies who adapt their strategies and operating models, to not only protect but take advantage of technology and innovative thinking, will be best placed to seize competitive advantage.