Despite anxiety about economic conditions, M&A emerges as a crucial tool for Australasia in the corporate response to digital disruption and rapidly evolving technologies.
The 2019 EY Global Capital Confidence Barometer (pdf) has landed, bringing with it a wealth of insights into the state of play, both global and local, into the economy, key topics in corporate boardrooms and, of course, appetite for M&A.
“It’s a compelling view of the sentiment around deal-making, key strategic issues being discussed in boardrooms and the outlook on economic conditions,” says David Larocca, EY Oceania Managing Partner, Strategy and Transactions, of the report which surveyed 2,900 executives in 45 countries including executives from 170 Australian and New Zealand companies. “It gives a perspective on the mood in the market globally, as well as here in Australia and New Zealand, about how executives are feeling about the economy and their intent to undertake M&A,” he says.
The following themes are coming through for Australia and New Zealand from the 21st edition of the M&A survey.
Economic outlook slips but still strong
There is a slight downward shift in the domestic economic outlook as 65% of respondents from Australia and New Zealand are expecting domestic economic growth to accelerate, compared to 74% in 2018 – a drop of 9 percentage points (expectations of the global economy have also taken a similar hit). At the same time, confidence in stability has risen, from 24% in 2018 to 28% in 2019.
Taken as a whole, these figures reveal stable confidence in the market, Larocca says. “Relatively speaking there’s been a bit of a dip, but the economic outlook remains pretty solid. More than 90% are still saying they expect the local economy to remain stable or grow, and the majority (82%) are saying their views have stayed the same or modestly improved in the last six months. It’s still probably a muted mood rather than a downturn mood that’s coming through in these results.”