Thirst for skill driving global dealmaking appetite
Competition for skilled staff is forcing companies’ hands to make more acquisitions, outweighing a backdrop of global uncertainty which is pushing down on deals, experts have said.
Research from consultancy EY shows that 52% of senior executives think their business will actively pursue deals in the next 12 month.
The figure is a 7 percentage point drop on the last time EY questioned chief executives and finance chiefs on their plans, but is up from 46% in October last year.
Companies recognise they need to transform to compete in a modern economy, and acquisitions give them a quick way to get new talent, Steve Krouskos told the PA news agency.
“There’s such intense competition for talent, and for technology, to create … competitive advantage, and that’s forcing the buy versus build decision that companies are always faced with,” he said.
He added: “[Acquiring is] a more expedient, more effective way, in a time when competition is so fierce and speed is so important.”
Serious change in the acquisition market will only happen with a “synchronised set of catastrophic events of a similar scale to the global financial crisis,” Mr Krouskos said. “I don’t see that happening.”
Meanwhile, companies are sitting on a nine trillion US dollar pile of cash which can be channelled towards takeovers. And private equity has around 2.2 trillion dollars waiting to be used.
It comes as the London Stock Exchange in August penned a 27 billion US dollar (£21 billion) deal to buy Refinitiv, a market data company. The deal was largely seen as a move to bring talent in house.
The EY Global Capital Confidence Barometer shows that 76% of executives think that the global economy will grow. However the number foreseeing a decline increased twelvefold since the last survey, at 12%.
Executives were most worried about uncertainty over trade and tariffs, while as many, 14%, were worried about a slowing economy as challenges posed by new environmental policies or rules.