4 Out of 5 CEOs are Eyeing M&A, Survey Finds

Throngs of CEOs expect to pursue M&A this year, as a perceived need to stay digitally relevant combines with a supportive economic climate to supercharge company growth ambitions.

According to a new survey by EY, some 79% of U.S. executives expect to embark on an M&A transaction in the next 12 months, well above the survey’s long-term average of 47%.

Their enthusiasm comes as the economy continues to recover, notwithstanding the odd bump in the road, and Donald Trump promises tax reform that could give companies piles more capital to invest.

EY’s survey was based on interviews with more than 2,300 executives from large companies around the world, including 459 from the U.S.

“A LITTLE MORE THAN HALF OF U.S. EXECUTIVES SURVEYED THINK TRUMP IS CREATING MORE M&A OPPORTUNITIES.”

A little more than half of the U.S. executives think Trump is creating more M&A opportunities, though many aren’t waiting around for his planned tax cuts to come through. First-quarter deal volumes jumped 22% on year to $366 billion, their highest quarterly level in a decade.

As recently reported by Chief Executive, executives are increasingly mulling partnerships with tech startups to boost their digital know-how, rather than trying to innovate entirely in-house. The need for CEOs to invest comes as new technologies such as the Internet of Things, big data and artificial intelligence change the way companies in almost every industry do business.

“They must be cognizant of political uncertainties, while actively maintaining their search for strategic opportunities to drive growth,” EY Americas vice-chair William M. Casey said. “The risk of being left behind is far too great to ignore—so the deals continue.”

Even so, many respondents still expect to enjoy a tailwind, with 58% seeing the U.S. economy improving over the next 12 months, compared to just 4% a year earlier. Such confidence has been reflected in a string of other surveys, including a PwC poll of private company executives released yesterday that showed 66% are optimistic about the economy.

Technological disruption, meanwhile, while driving many deals, is also preventing others. Executives in the U.S. cited cybersecurity as the top reason for killing a deal in the past 12 months, followed by issues uncovered during due diligence and economic and political instability.

Ross Kelly
Ross Kelly is a London-based business journalist. He has been a staff correspondent or editor at The Wall Street Journal, Yahoo Finance and the Australian Associated Press.

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