Companies are acquiring innovation and forging alliances with unconventional partners
EY’s latest Global Capital Confidence Barometer continues to find a strong acquisition appetite together with a growing inclination to forge new alliances. Prolonged economic challenges are driving investment decisions, leading companies to ally and cooperate to generate growth as well as compete and acquire to gain market share.
The macroeconomic environment remains challenging. Economic growth remains subdued. Low inflation endures. Price sensitivity becomes ever more intense. Within this complex environment, disruption continues to fundamentally challenge current business models. Increased innovation and sector convergence are accelerating the emergence of new competitors across many industries. Changing customer preferences and shifting consumer behaviors are transforming the business landscape. In a digital “sharing economy,” where peers pool their access to goods and services, past performance is neither an indicator nor a guarantee of future success.
Planning for multiple futures
Executives now find themselves planning for multiple possible futures. Buying and selling can be a transformative means to reshape and refocus the business. M&A remains a strong option to accelerate strategic plans and offer the prospect of game-changing competitive advantage. At the same time, alliances are becoming more attractive as companies seek new sources of revenue and earnings while looking to manage costs and risk. Increasingly, companies are taking this option to bolster their research-and-development processes. As sectors converge, the evolutionary paths of industries are unclear. Companies are shrewdly spreading risks as they pursue growth.
In this bold new world, those companies that best achieve commercial advantage through combining strategic M&A and cooperative responses to new challenges will be best positioned to win. Buying and bonding are now key features of the corporate growth agenda.
Read more in EY's 14th Global Capital Confidence Barometer:
Key M&A findings
United States highlights
Sector specific reports: