UK CEOs moving from “reactive to proactive” M&A strategies

UK CEOs are increasingly positive about the country’s economic outlook, their own company’s prospects and the possibility of investment in areas such as M&A activity over the coming 12 months, according to a new survey.

EY-Parthenon polled 100 UK CEOs for the survey and found that 68 per cent were positive about new investment in M&A or joint ventures over the next 12 months, with EY’s Silvia Rindone saying that the survey showed UK bosses were moving “from a reactive to proactive deal strategy” in the face of increasing disruption.

67 per cent of CEOs polled said that they were very or somewhat optimistic about the UK’s economic prospects over the next year, while 73 per cent said they were very or somewhat confident about the profitability of their own company over the same period.

The report suggests that heightened geopolitical and macroeconomic uncertainty around the world may be improving the popularity of developed markets, with the US and the UK occupying the top two spots for M&A activity during 2024.

Researchers found that the UK is home to many in-demand assets, including in areas such as life sciences, high-end manufacturing and technology. The UK is also among the most attractive destinations for inbound investment, something that the researchers say could be boosted further if the new Labour government is able to reduce trade frictions with the EU.

Despite the positive overall sentiment reflected in the research, CEOs also identified a number of key challenges. 45 per cent stated that emerging technologies, such as AI, would be among the top disruptors in their industry over the coming year, while 38 per cent cited geopolitical disruption and the shifting global economic environment.

36 per cent, meanwhile, said they were concerned at the higher cost of capital and 23 per cent identified climate change and environmental issues as being among the biggest disruptors.

Overall, 34 per cent of UK CEOs said they were highly responsive to these kinds of disruptions and 64 per cent said that they were “moderately responsive”, but still required improvement.

Silvia Rindone, EY UK&I Managing Partner for Strategy and Transactions, commented: “After a challenging few years, it’s encouraging to see a positive shift in sentiment among UK business leaders.”

“This renewed confidence, reflected in our latest survey, will help drive UK CEOs to move from a reactive to proactive deal strategy and capitalise on disruptive forces at play. It’s critical that business leaders maintain an agile and forward-thinking approach to portfolio management to adapt to this new dynamic landscape and ensure they don’t get left behind.”

91 per cent of CEOs polled said that they had either cancelled or paused a transaction over the past year, with 32 per cent saying that financing costs had been too high. However, 98 per cent now say they expect to actively pursue transaction opportunities over the coming year, with 40 per cent considering M&A, 49 per cent exploring joint ventures or strategic partnerships and 31 per cent looking at divestments, spin-offs or IPOs.

Rindone continued: “The CEO survey results highlight a significant appetite for transactions among UK CEOs, however, while many are eager to engage in deals, the fact that 91% had to pause or cancel transactions due to high financing costs underscores the ongoing challenges of capital availability. This balancing act between opportunity and financial caution will likely shape corporate strategies in the year ahead.”


Find out more about growing levels of optimism among UK dealmakers

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