EY CEO Outlook Pulse 2024: $3 Trillion M&A Deals Above $100 Million in 2023, 2024 Top 5 Locations for M&A are United States, Japan, United Kingdom, China & India, 2024 Top 5 Sectors for M&A are Advanced Manufacturing, Banking & Capital Markets, Insurance, Consumer Products & Mobility
1st March 2024 | Hong Kong
EY has released the EY CEO Outlook Pulse 2024, providing key insights (quarterly) from 1,200 CEOs globally (62% with revenue > $1 billion) on boardroom agenda including capital allocation, investment & business transformation strategies, and 300 investment leaders in private equity (85% with AUM > $1 billion, 45% > $10 billion AUM, 20% > $50 billion AUM) on acquiring, restructuring & revitalizing businesses. In 2023, a total of $3 trillion M&A deals (above $100 million) were transacted. The top 5 locations for M&A in 2024 are United States, Japan, United Kingdom, China & India, and the top 5 sectors for M&A are Advanced manufacturing, Banking & capital markets, Insurance, Consumer products, Mobility. Forecast increase in mega deals in 2024 – CEOs 79%, Private equity leaders 71%. CEOs planning asset sale / divestment in next 12 months – 29%. Top locations for divestment in next 12 months – China, United Kingdom, Japan, Malaysia, India. Top sectors for divestment in next 12 months – Advanced manufacturing, Banking & capital markets, Technology, Telecom, Life sciences. Top 3 reasons for divestment – Assets no longer fitting future portfolio strategy, Enable focused allocation of capital & resources, Free up capital to reinvest in other strategic priorities. Top 3 reasons for not divesting – Operational & technology dependencies (too complex to separate), Lack of resources of leadership time to manage process, Stakeholder sentiments against divestment. Top 5 challenges for private equity leaders when acquiring assets – Lost capabilities (process breakdown, people leaving, distractions from core business) 34%, Failed to achieve cost efficiencies 33%, Less / no synergy (loss of customers, economies of scale) 32%, High post-separation costs 26%, Failed to achieve growth target 24%. CEOs on changing strategic investment plan due to geopolitical risks – Changing strategic investment plan 98%, Delaying planned investment or divestment 42%, Reconfigure supply chains 40%, Stopping or cancelling planned investment or divestment 38%, Relocating operational assets 37%, Exiting certain businesses 32%. Private Equity Leaders on changing strategic investment plan due to geopolitical risks – Changing strategic investment plan 98%, Delaying planned investment or divestment 38%, Reconfigure supply chains 33%, Stopping or cancelling planned investment or divestment 33%, Relocating operational assets 32%, Exiting certain businesses 26%. On Business Revenue growth forecast in 2024 to increase – 64% / 75% (Global / APAC). Profit forecast in 2024 to increase – 63% / 74% (Global / APAC). Business Cost in 2024 to increase – 57% / 70% (Global / APAC). Top 7 reasons to transform business portfolio – Impact of technology reshaping industry, Take advantage of market conditions / valuation, Refocus capital allocation, Improve financial performance, React to new competition, Pressure from activist shareholders, Focus on core capabilities. Top 5 business strategies priorities in next 12 months – Manage working capital & treasury more effectively, Adopt AI (Artificial intelligence) to drive efficiencies & improve business performance, Adjust presence in certain markets (geopolitical instability), Reconfigure supply chains (eg. near shoring), Invest into new products & services. See below for key findings & summary | View report here
“ $3 Trillion M&A Deals Above $100 Million in 2023, 2024 Top 5 Locations for M&A are United States, Japan, United Kingdom, China & India, 2024 Top 5 Sectors for M&A are Advanced Manufacturing, Banking & Capital Markets, Insurance, Consumer Products & Mobility “
EY CEO Outlook Pulse 2024
EY has released the CEO Outlook Pulse 2024, providing key insights (quarterly) from 1,200 CEOs globally (62% with revenue > $1 billion) on boardroom agenda including capital allocation, investment & business transformation strategies, and 300 investment leaders in private equity (85% with AUM > $1 billion, 45% > $10 billion AUM, 20% > $50 billion AUM) on acquiring, restructuring & revitalizing businesses.
Summary
- CEOs – 1,200 (62% with revenue > $1 billion)
- Private Equity Leaders – 300 (85% with AUM > $1 billion, 45% > $10 billion AUM, 20% > $50 billion AUM)
- Top 5 locations for M&A in next 12 months – United States, Japan, United Kingdom, China, India
- Top 5 sectors for M&A in next 12 months – Advanced manufacturing, Banking & capital markets, Insurance, Consumer products, Mobility
- Total 2023 M&A Deals (> $100 million deals) – $3 trillion (2022: $3.4 trillion)
- Forecast increase in mega deals in 2024 – CEOs 79%, Private equity leaders 71%
- CEOs planning asset sale / divestment in next 12 months – 29%
- Top locations for divestment in next 12 months – China, United Kingdom, Japan, Malaysia, India
- Top sectors for divestment in next 12 months – Advanced manufacturing, Banking & capital markets, Technology, Telecom, Life sciences
- Top 3 reasons for divestment – Assets no longer fitting future portfolio strategy, Enable focused allocation of capital & resources, Free up capital to reinvest in other strategic priorities
- Top 3 reasons for not divesting – Operational & technology dependencies (too complex to separate), Lack of resources of leadership time to manage process, Stakeholder sentiments against divestment
- Top 5 challenges for private equity leaders when acquiring assets – Lost capabilities (process breakdown, people leaving, distractions from core business) 34%, Failed to achieve cost efficiencies 33%, Less / no synergy (loss of customers, economies of scale) 32%, High post-separation costs 26%, Failed to achieve growth target 24%
- CEOs on changing strategic investment plan due to geopolitical risks – Changing strategic investment plan 98%, Delaying planned investment or divestment 42%, Reconfigure supply chains 40%, Stopping or cancelling planned investment or divestment 38%, Relocating operational assets 37%, Exiting certain businesses 32%
- Private Equity Leaders on changing strategic investment plan due to geopolitical risks – Changing strategic investment plan 98%, Delaying planned investment or divestment 38%, Reconfigure supply chains 33%, Stopping or cancelling planned investment or divestment 33%, Relocating operational assets 32%, Exiting certain businesses 26%
On Business
- Revenue growth forecast in 2024 Increase – 64% / 75% (Global / APAC)
- Profit forecast in 2024 – Increase – 63% / 74% (Global / APAC)
- Business Cost in 2024 – Increase – 57% / 70% (Global / APAC)
- Top 7 reasons to transform business portfolio – Impact of technology reshaping industry, Take advantage of market conditions / valuation, Refocus capital allocation, Improve financial performance, React to new competition, Pressure from activist shareholders, Focus on core capabilities
- Top 5 business strategies priorities in next 12 months – Manage working capital & treasury more effectively, Adopt AI (Artificial intelligence) to drive efficiencies & improve business performance, Adjust presence in certain markets (geopolitical instability), Reconfigure supply chains (eg. near shoring), Invest into new products & services
- CEOs to pass on increased costs to customers – All increased costs 36%, More than 50% of increased costs 49%
- AI (Artificial intelligence) will improve efficiency but have little impact on revenue growth (CEO / Private Equity Leaders) – Agree 76% / 66%
EY CEO Outlook Pulse 2024
1) CEOs & Private Equity Leaders Profile
Respondents
- CEOs – 1,200 (62% with revenue > $1 billion)
- Private Equity Leaders – 300 (85% with AUM > $1 billion, 45% > $10 billion AUM, 20% > $50 billion AUM)
Company Annual Revenue:
- Less than $500 million – 9%
- $500 m to $999.9 million – 19%
- $1 b to $4.9 billion – 30%
- More than $5 billion – 32%
Private Equity AUM:
- Less than $1 billion – 15%
- $1 b to $9.99 billion – 40%
- $10 b to $49.99 billion – 25%
- More than $50 billion – 20%
2) Mergers & Acquisitions (M&A)
Top 5 locations for M&A in next 12 months – CEOs Outlook:
- United States
- Japan
- United Kingdom
- China
- India
Top 5 sectors for M&A in next 12 months – CEOs Outlook:
- Advanced manufacturing
- Banking & capital markets
- Insurance
- Consumer products
- Mobility
2023 M&A Deals (> $100 million deals):
- Q1 – $581 billion
- Q2 – $707 billion
- Q3 – $719 billion
- Q4 – $1 trillion
- Total – $3 trillion
M&A Deals in last 5 years (> $100 million deals):
- 2019 – $3.6 trillion
- 2020 – $3.4 trillion
- 2021 – $5.4 trillion
- 2022 – $3.4 trillion
- 2023 – $3 trillion
Forecast increase in mega deals in 2024:
- CEOs – 79%
- Private equity leaders – 71%
3) CEOs & Private Equity Leaders on Divestment
- CEOs planning asset sale in next 12 months – 29%
- CEOs assets to fund transformation initiatives – 16%
Top 5 locations for divestment in next 12 months – CEOs Outlook:
- China
- United Kingdom
- Japan
- Malaysia
- India
Top 5 sectors for divestment in next 12 months – CEOs Outlook:
- Advanced manufacturing
- Banking & capital markets
- Technology
- Telecom
- Life sciences
Top 3 reasons for divestment:
- Assets no longer fitting future portfolio strategy
- Enable focused allocation of capital & resources
- Free up capital to reinvest in other strategic priorities
Top 3 reasons for not divesting by CEOs:
- Operational & technology dependencies (too complex to separate)
- Lack of resources of leadership time to manage process
- Stakeholder sentiments against divestment
Top 3 success factors for divesting by CEOs:
- Focus on change management & culture
- Clear separation perimeter within organisations
- Achieving transactions targets
Top 5 challenges for private equity leaders when acquiring assets:
- Lost capabilities (process breakdown, people leaving, distractions from core business) – 34%
- Failed to achieve cost efficiencies – 33%
- Less / no synergy (loss of customers, economies of scale) – 32%
- High post-separation costs – 26%
- Failed to achieve growth target – 24%
4) Managing Geopolitical risks
CEOs on changing strategic investment plan due to geopolitical risks:
- Changing strategic investment plan – 98%
- Delaying planned investment or divestment – 42%
- Reconfigure supply chains – 40%
- Stopping or cancelling planned investment or divestment – 38%
- Relocating operational assets – 37%
- Exiting certain businesses – 32%
Private Equity Leaders on changing strategic investment plan due to geopolitical risks:
- Changing strategic investment plan – 98%
- Delaying planned investment or divestment – 38%
- Reconfigure supply chains – 33%
- Stopping or cancelling planned investment or divestment – 33%
- Relocating operational assets – 32%
- Exiting certain businesses – 26%
CEOs on political challenges:
- Populist movements increases geopolitical uncertainty & create business challenges – 78%
- AI (Artificial intelligence) misused in politics to impact elections- 76%
Capability to monitor geopolitical risks in strategic & investment decision-making:
- Some capability / advanced capability – 93%
- Regular assessments on impact to company – 93%
- Defined & active proceses to manage risks – 93%
- Clear governance frameworks & board oversight for geopolitical risk – 93%
- Geopolitical risk assessments for major investment & M&A decisions – 94%
Companies with advanced capabilities to monitor geopolitical risks:
- Stopping or cancelling planned investment or divestment – 40% / 38%
- Relocating operational assets – 40% / 37%
- Reconfigure supply chains – 56% / 39%
- Exciting certain businesses – 40% / 31%
- Delaying planned investment or divestment – 36% / 42%
5) Business Portfolio
Revenue growth forecast in 2024 (Global / APAC):
- Increase – 64% / 75%
- Same – 30% / 21%
- Decrease – 6% / 4%
Profit forecast in 2024 (Global / APAC):
- Increase – 63% / 74%
- Same – 30% / 22%
- Decrease – 7% / 4%
Business Cost in 2024 (Global / APAC):
- Increase – 57% / 70%
- Same – 37% / 26%
- Decrease – 6% / 4%
Business portfolio transformation:
- To accelerate transformation – 58%
- Maintain same transformation level – 37%
- Not planning to transform portfolio – 5%
Top 7 reasons to transform business portfolio:
- Impact of technology reshaping industry – 32%
- Take advantage of market conditions / valuation – 31%
- Refocus capital allocation – 29%
- Improve financial performance – 28%
- React to new competition – 27%
- Pressure from activist shareholders – 26%
- Focus on core capabilities – 26%
4 Primary ways to finance business portfolio transformation:
- Improve performance & profitability – 32%
- Raise new capital from existing or new shareholders – 27%
- Raise new capital via issuing new debt or bank loans – 25%
- Selling non-core assets or spinning off assets – 16%
Top 5 business strategies priorities in next 12 months:
- Manage working capital & treasury more effectively – 42%
- Adopt AI (Artificial intelligence) to drive efficiencies & improve business performance – 41%
- Adjust presence in certain markets (geopolitical instability) – 37%
- Reconfigure supply chains (eg. near shoring) – 34%
- Invest into new products & services – 33%
6) Business Landscape
CEOs to pass on increased costs to customers:
- All increased costs – 36%
- More than 50% of increased costs – 49%
- Less than 50% of increased costs – 14%
- No cost transfer to customers – 1%
AI (Artificial intelligence) will improve efficiency but have little impact on revenue growth (CEO / Private Equity Leaders):
- Agree – 76% / 66%
- Neutral – 13% / 15%
- Disagree – 11% / 19%
Private equity leaders buying assets from corporate:
Costs:
- More than expected – 27%
- Met expectation – 59%
- Less than expected – 14%
Time taken to complete:
- More than expected – 32%
- Met expectation – 52%
- Less than expected – 16%
Value created:
- More than expected – 34%
- Met expectation – 56%
- Less than expected – 10%
EY CEO Outlook Pulse 2024
On behalf of the global EY organization, in December 2023 & January 2024, FT Longitude, the specialist research and content marketing division of the Financial Times Group, conducted 2 comparative surveys:
1) An anonymous online survey of 1,200 CEOs from large companies around the world that aims to provide valuable insights on the main trends and developments impacting the world’s leading companies as well as business leaders’ expectations for future growth and long-term value creation. Respondents represented 21 countries (Brazil, Canada, Mexico, the United States, Belgium, Luxembourg, the Netherlands, France, Germany, Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore and South Korea) and five industries (consumer and health; financial services; industrials and energy; infrastructure; technology, media and telecoms). Surveyed companies’ annual global revenues were as follows:
- Less than $500 m – 9%
- $500 m to $999.9 m – 19%
- $1 b to $4.9 b – 30%
- More than $5 b – 32%
2) An anonymous online survey of 300 investment leaders from the PE industry, reflecting that sector’s unique perspective on acquiring, restructuring and revitalizing businesses. Respondents represented 21 countries (Brazil, Canada, Mexico, the United States, Belgium, Luxembourg, the Netherlands, France, Germany, Italy, Denmark, Finland, Norway, Sweden, the United Kingdom, Australia, China, India, Japan, Singapore and South Korea). Surveyed institutions’ assets under management (AUM) were as follows:
- Less than $1 b – 15%
- $1 b to $9.99 b – 40%
- $10 b to $49.99 b – 25%
- More than $50 b – 20%
View report here
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