Despite mounting geopolitical complexities, the appetite for global M&A is at a 10-year high, according to the 20th edition of the EY Global Capital Confidence Barometer, a biannual survey of more than 2,900 senior executives across 47 countries. Companies continue to use acquisitions to build the foundations for future growth amid rising uncertainty.
Watch the full video of Steve Krouskos, EY Global Vice Chair – Transaction Advisory Services, discussing the latest Global Capital Confidence Barometer findings on CNBC and the reasons behind the bullish outlook for the M&A market and global economy:
- Why are so many companies acquiring?
- What is driving companies to increase the frequency for portfolio reviews?
- What are the trends and risks for dealmaking in 2019 and beyond?
- Where is the next hot spot for M&A activity?
Global M&A appetite is at a 10-year high
Almost six in ten (59%) global companies are now planning to acquire in the coming year — up from 52% 12 months ago. M&A intentions are underpinned by broader corporate confidence.
- In stark contrast to many economists forecasting slower growth and despite geopolitical uncertainty, global executives are more optimistic about macroeconomic prospects.
- The vast majority of respondents (93%) believe the global economy is improving – a 20-point uptick in positive outlook compared with 73% a year ago.
This bullish view among executives is reflected in the optimistic assessments of their own future performance: 76% of respondents expect revenue growth of between 6% and 15% in the next year.
M&A fueled by portfolio reshaping
Companies worldwide are increasingly concentrating on proactively seizing disruption’s upside opportunities and managing risks. As the speed of disruption and innovation accelerate, so does the frequency of portfolio reviews.
- More than a third (41%) of companies are reviewing their portfolios every three months compared with less than 10% a year ago.
- Frequent portfolio reviews allow companies to better identify areas for investments and acquisitions at speed, to recognize assets to divest and to improve capital allocation strategies.
Despite continued uncertainty stemming from its intention to leave the European Union (EU), the UK climbs to number one spot in the top investment destinations for the first time in the survey’s 10-year history – up from its lowest 7th position in October 2016 and displacing the United States (US) which held the top spot since 2014. The UK is followed by the United States, Germany, China, France, Canada, India, Australia, Brazil and the United Arab Emirates.