- Manufacturers have positive outlook on global economy and are seeking new geographic markets and cross-border opportunities for M&A
- 48% of global executives cite regulatory and political uncertainty as leading risk to dealmaking
The appetite for dealmaking among global advanced manufacturing (Mfg) executives is strong, with half (50%) of respondents to the latest EY Advanced Manufacturing Global Capital Confidence Barometer (CCB) planning to actively pursue mergers and acquisitions (M&A) in the next 12 months. The report also reveals that 91% of executives expect the M&A market to improve in the next 12 months.
Mfg executives are highly confident about the macroeconomic environment the report finds. Eighty-five percent of respondents expect the global economy to improve, and 86% anticipate better corporate earnings over the next 12 months. This optimism is driving two-thirds (66%) of executives to review their portfolios for divestment opportunities more than once a year. More than a quarter (28%) of Mfg executives said entering new markets was the strategic driver behind M&A.
David Gale, EY Global Advanced Manufacturing Transactions Leader, says:
“Confidence in the global economy is helping advanced manufacturing executives propel their M&A strategies. Manufacturing companies continue to look for opportunities to expand into new markets through acquisitions and are using M&A as a means to enhance technological and digital capabilities, including robotics, artificial intelligence, data analytics and establishing the shop floor of the future.”
Rapid changes in trade policy globally have introduced a new level of unpredictability to M&A across the sector. Regulatory policy and uncertainty was cited by nearly half (48%) of executives as the leading risk to dealmaking. In response, 21% of global Mfg executives say they are focusing on more cross-border opportunities as a result of the current trade climate.
Gale says: “Despite geopolitical headwinds, and particularly ongoing trade tensions, M&A fundamentals remain robust with 57% of Mfg respondents to our latest Capital Confidence Barometer expecting to see an improvement in deal completion rates in the next 12 months. Manufacturing companies should incorporate the tariffs and trade policy changes into their overall M&A strategy and adapt accordingly. For some companies, this may mean pursuing cross-border deals to mitigate potential supply chain interruptions; for others, it might require focusing on domestic deals until trade disputes have played out.”
For more information, visit ey.com/en_gl/ccb/19/advanced-manufacturing
Notes to Editors
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.
EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.
This news release has been issued by EYGM Limited, a member of the global EY organization that also does not provide any services to clients.
About the EY Global Capital Confidence Barometer
EY Global Capital Confidence Barometer is a biannual survey compiled by Euromoney Institutional Investor Thought Leadership of more than 2,600 senior executives from large companies around the world and across industry sectors. This is the 19th biannual CCB in the series, which began in November 2009; respondents for the 19th edition were surveyed in August and September 2018. Respondents represented 14 sectors, including 349 respondents from advanced manufacturing. The objective of the Global Capital Confidence Barometer is to gauge corporate confidence in the global and domestic economic outlook, to understand boardroom priorities in the next 12 months and to identify emerging capital practices that will distinguish those companies building competitive advantage as the global economy continues to evolve. ey.com/ccb #EYCCB.