The first EY Global Capital Confidence Barometer was launched 10 years ago in the wake of the Global Financial Crisis (GFC). At that time, the survey results reflected the great unease across the markets. We again find ourselves in a period of uncertainty. Though nothing like the magnitude we experienced a decade ago, we don’t need to look far to find negative headlines and speculation about an economic downturn.
However, the one major difference between now and then is how the C-suite views uncertainty. Ten years ago, boardrooms were paralyzed by uncertainty. Today they are motivated by uncertainty. The boardroom of 2019 is concentrating on proactively managing risks and seizing the upside opportunities of disruption.
Which is why we find global executives more bullish in their outlook than many economic and business commentators — they are building resilience into their operations while, at the same time, laying the foundation for future growth in three key ways.
- Reshaping results — instilling financial discipline while realigning portfolios — optimizing strategic, operational and commercial performance to future-proof growth
- Reimagining their ecosystems — looking at more innovative business models and collaborations to access new markets and customers
- Reinventing their future — learning from the past while envisioning the future in a digitally enabled, hyper-speed world
For the majority of our respondents, the fastest way to achieve this transformation is through M&A. The Barometer has been a reliable guide to the M&A market over this post-GFC decade. It has correctly predicted the direction of sentiment and highlighted the key drivers of deals. A record number of executives are now looking to transact in the next 12 months and, unforeseen events notwithstanding, the outlook for dealmaking is strong.
Those executives who balance the risks and rewards of M&A will be best positioned to reshape their companies for a better tomorrow.
The chart below demonstrates the consistent accuracy the Barometer has predicted of global M&A activity.