It is the emerging risks concerning regulatory, geopolitical and policy uncertainty that Eurozone executives see as a major threat to their core business (28%) and the biggest risk to dealmaking (45%). It is no surprise then that a quarter are looking to mitigate the impact of trade and tariffs (16%) or to secure supply chains (11%) through M&A.
This pragmatism by Eurozone executives is corroborated by their choice of an investment destination for deals. While the area’s four big economies (Germany, France, Italy and Spain) make the top five, it is the UK in second place that shows Eurozone companies are on the forefront regarding this disruption.
There is also a keen focus on their portfolio robustness and resilience. Two-thirds of Eurozone executives (66%) now review their portfolios more frequently than once a year. They also review the strategic and financial criteria for their existing businesses to reflect changes in economic outlook, capital costs and industry dynamics more often. And they are generally looking to divest assets that are underperforming or at risk of digital disruption (71%).
Brexit is a potential headwind for many Eurozone executives. What they are most keen to see from the negotiations between the UK and EU is a familiar landscape in which to operate. Existing frameworks such as Switzerland, Norway and Canada are attractive options. What they do not want is further uncertainty. A second referendum that may keep the UK in the EU is favored by just 5% of Eurozone executives, which is the same percentage as those who would prefer a trading relationship based on WTO rules.