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Business leaders continue to be fairly confident about the future, despite global and local geopolitical and economic concerns, a new survey has shown.
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Business confidence ‘largely positive’ despite concerns
26 November 2019
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EY’s bi-yearly survey of corporate sentiment in capital markets has revealed that appetite to actively pursue mergers and acquisitions continues to trend upwards, with 53 per cent of respondents indicating a desire to do so over the next 12 months.
Of the 2,900 executives in 45 countries surveyed for the big four firm’s global capital confidence barometer, including executives from 170 Australian and New Zealand companies, 77 per cent viewed the global economy as growing, down from 83 per cent last year.
“I would describe these economic outlook results as muted, as opposed to executives planning for a downturn,” said EY Oceania leader for transaction advisory services David Larocca.
“Geopolitical uncertainty including ongoing trade disputes globally will have played a part. Certainly, regulatory uncertainty was the major concern for both global and local respondents.
“Regardless, the results are largely positive, with 90 per cent of executives still expecting the economy to remain stable or grow in the coming 12 months.”
Mr Larocca believes the upward trend towards dealmaking comes as executives see acquisitions as a fast way to gain capacity and generate growth.
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“Executives are saying that in the transformative age, where speed is of the essence, one can’t afford to pause and wait to see how economic conditions might play out. Executives know they need to act quickly to take advantage of opportunities; otherwise, someone else will take their place,” he said.
“Although concerns about economic conditions have increased, there is still a strong intent to undertake M&A, particularly as a response to the tech-led disruption that is occurring to business models.”
Local businesses also remain very confident in their own outlook, with the survey revealing that 97 per cent expect their profit margins to increase or stay the same over the coming year, and 97 per cent expect sales/revenue to increase or stay the same.
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