Companies focus on “new”
Technological disruption remains a significant driver of UK investment. Weak official business investment data, combined with robust M&A activity — especially in digital categories — echoes the CCB20 data, which shows an increasing preference for “buy” over “build.” This may reflect the confidence companies have in their ability to execute M&A compared with the more uncertain environment for new capital investment, which offers longer payback periods.
Nevertheless, even with this increasing emphasis on M&A, CCB20 consistently shows UK respondents ahead of their global peers in terms of their commitment to investing in the development of new products. “Developing new products and services” is the growth strategy with the highest strategic priority among UK respondents, compared with the global priority of “expanding in domestic markets.” The UK C-suite’s priority for technological investment is also to focus on “new services and products” (22%), with global respondents instead prioritizing “internal efficiencies.”
The UK’s attraction
UK companies’ emphasis on innovation has no doubt contributed to the UK becoming the global C-suite’s preferred destination for M&A in CCB20. To some extent, the UK’s rise in popularity as an M&A destination may reflect slowdowns in other major economies. But it’s also a measure of UK public limited companies’ resilience and continuing attractiveness that the UK leads the way in 2019, despite the uncertainties that surround Brexit.
Consumer products and retail, industrials and financial services are named by global respondents as the top-three targeted UK sectors. As well as the UK’s focus on innovation, this may also reflect some supply chain and regulatory repositioning by global companies, as they prepare for life after Brexit.