4 minute read 13 Apr 2021
Soyuz carrier rocket in Samara, Russia

Nordic executives focus M&A on enhancing operational capabilities

Nordic companies have confidence in their performance during the pandemic but see continued operational enhancements as key to recovery.

In brief
  • Nordic companies believe they have performed relatively well during the COVID-19 pandemic compared to their peers.
  • Corporate strategy objectives indicate Nordic companies are more focused on what’s next rather than now.
  • M&A will center on acquiring operational capabilities; Nordic executives expect increased competition from PE.

Although Nordic companies have felt the impact of the COVID-19 pandemic, they believe they have fared reasonably well, particularly in terms of business continuity and operational stability, as compared with their global peers.

According to the latest EY Global Capital Confidence Barometer (pdf), 86% and 91% of Nordic companies, respectively, say they saw significant declines in revenue and profit as a result of the pandemic. Of course, some sectors have been hit harder than others, and recovery times will vary depending on the depth of the impact. However, 74% of those affected expect pre-pandemic revenue levels returning by next year; 61% foresee profit levels to return within the same time frame.

Pandemic impact


of Nordic companies anticipate revenues to return to pre-pandemic levels by 2022.

There are several reasons Nordic companies may feel more confident about their ability to navigate the pandemic crisis. From an economic and societal perspective, Nordic countries — Finland, Norway, Sweden, Denmark — have more established governmental institutions and universal health care systems, and governments have enacted supportive stimulus programs. From a business standpoint, digitization levels among Nordic companies were already high pre-pandemic, allowing them to pivot and respond as the crisis unfolded with minimal business interruption. Further, with a high concentration of knowledge- and information-based businesses rather than heavy industrial companies, companies were able to more easily adapt to the changing business environment without having to make substantial changes to their operating models.

Given their confidence in their ability to successfully steer through the pandemic crisis, Nordic companies are more future-focused on the risks that lie ahead, with macroeconomic performance (16%) and increasing competition from nontraditional competitors (13%) topping their list of concerns. The continuing pandemic ranks fifth on the list of greatest risks (9%) among Nordic executives, whereas global respondents still see it as the number one external risk to their business (18%).

Nordic executives’ corporate strategy zeroes in on forward-looking objectives

As positive as Nordic executives are about their resilience during the crisis, 72% say their company has undertaken a thorough strategic and portfolio review in the last year. However, fewer than half say the review was accelerated because of the pandemic.

Their reasons reflect more forward-looking objectives, including responding to changes in their ecosystem (13%), managing the potential impact of changing geopolitical and regulatory risks, and looking for areas of growth to make acquisitions.

Nordic companies also cite investing in accelerating digitization of customer journeys and business processes and attracting and retaining customers as dominant strategic imperatives for growth. These actions reflect the areas Nordic executives say they are planning to focus more of their strategic investment on, namely, customer engagement (61%), digital transformation (58%) and operational stability (56%).

When asked what could hold their strategic intentions back, Nordic companies cite the tension between transformation and predictability, and between change management and internal inertia.

M&A focuses on enhancing operational capabilities, but Nordic companies expect competition from private equity (PE)

Aligned with strategic investment intentions, operational excellence is top of mind for Nordic companies considering M&A. Of the 44% of Nordic executives who say their company will be pursuing M&A in the next 12 months, 59% indicate they’ll primarily be focusing on targets that can enhance operational capabilities. This may include production efficiencies, improving distribution chains or reimagining supply chains to be more risk resilient.

M&A outlook


of Nordic executives expect their companies to actively pursue M&A in the next 12 months.

This stands in contrast with global respondents, who cite bolt-on acquisitions as their primary target. The difference in intentions may lie in the fact that Nordic markets are generally smaller and more consolidated than larger countries’, making most bolt-on acquisitions too small to provide sufficient value.

Whether their deal intentions are small or large, Nordic companies expect to face stiff competition, predominantly from private equity players. PE firms in the Nordics are well-established and are sitting in a lot of dry powder.

However, Nordic PEs aren’t the only firms looking to acquire. Given the level of business resilience many Nordic businesses have demonstrated during the pandemic, the region is considered one of the safest places in the world to invest at the present time. As such, US and European PE players are expected to target Nordic assets.

That said, with 61% of Nordic companies saying they’ll be considering cross-border targets, international interest is flowing in both directions.

In addition to acquiring, Nordic companies see divestments as a top driver for improving profit margins. This may increase pressure on the M&A market if the pandemic drags on and companies experience more significant financial issues.

Optimism meets pragmatism as Nordic companies chart their future

As confident as Nordic companies are of their performance during the pandemic crisis, they are proceeding with caution in the months ahead. Business resilience and operational stability will remain top priorities, even as they seek to evolve their digitization and improve customer engagement to achieve profitable growth.

Yet, despite their caution, Nordic companies also see M&A as an ideal route to transformation. This differs from the approach Nordic companies took after the global financial crisis (GFC) when M&A intentions dropped to as low as 28% in 2012. Although M&A intentions in the latest EY Global Capital Confidence Barometer (pdf) are lower than the previous year (44% in 2020 vs. 53% in 2019), this is more a reflection of a slow first half of 2020 when uncertainty around the pandemic was at its peak. Since then, M&A activity in the region has rebounded significantly.

With an appetite to seize the upside of disruption and with lessons learned from the GFC, Nordic companies are poised to use strategic and portfolio reviews to build operational resilience while pursuing M&A to accelerate growth and solidify their competitive advantage in the months and years ahead.


The EY Global Capital Confidence Barometer (pdf) gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agendas.

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By EY Global

Multidisciplinary professional services organization