The vast majority of advanced manufacturing executives (93%) see the global economy improving, up from 71% a year ago, while 84% expect sector earnings to improve (compared with 58% a year ago). The same percentage expect improving credit availability (up from 68%). This optimism can also be seen in M&A: 73% of executives believe that the number of deals completed by their companies will rise in the next 12 months.
As technology drives disruption, manufacturers are acquiring to adapt to the ever-changing new normal. Acquiring technology, talent, new production capabilities or innovative startups tops the strategic drivers behind acquisitions named by executives (23%), while sector convergence and growth into adjacent business activity was cited by 20%. With the expansion of digital technologies in products and services, as well as on factory floors, acquiring innovation can be faster than developing solutions in-house. Still, almost 90% of executives say valuing these acquisitions is either difficult or very difficult.
Executives also identified trade policy changes and supply chain security as a significant driver for acquisitions. Manufacturers are depending more than ever on their global footprints to provide agility in serving customers in different markets.