‘M&A is the best way to keep up with market changes’

Last modified: 21 December 2023 14:12
M&A as the best way to secure long-term viability, according to a new PwC report.

More than half of UK organizations consider M&A-transactions as the best way to keep pace with market changes, such as the rise of AI. This is evident from the research ‘Time to go further and faster: executing transactions to create value and accelerate transformation’ by PwC UK.

By transactions, the business leaders mean mergers, acquisitions, divestments, joint ventures and minority stakes.

The stakes are high for many organisations as they seek to create value and keep up with the rapid advancements in technology such as Generative AI (GenAI) while making progress on Net Zero ambitions. More than a third (35%) believe their business won’t be economically viable if they don’t make significant changes within the decade. They’re aware that organic development is no longer sufficient and largely believe transactions must play an instrumental role in enabling transformation at pace.

“In a market where competitiveness relies on agility, businesses must make transactions an integral part of their transformation strategy”, says Roberta Carter, UK Value Creation Leader at PwC UK. “They need to adapt at speed, but organic growth often loses momentum when set against the demands of day to day business operations. To create the most value, leaders must align transactions with a bold vision. Deals that support the business’s ability to continuously adapt are more likely to succeed. By carrying out transactions and transformation simultaneously, leaders can establish a virtuous cycle whereby both activities unlock more value.”

Three ways to create value with transactions

The survey highlights three kinds of value businesses are primarily trying to create through transactions in the next three years.

1. Stronger ESG performance is one, with almost three quarters (72%) saying they are likely to use transactions to help reduce emissions and meet their Net Zero commitments. The findings also show that companies are more likely to approach this ambition by divesting businesses rather than acquiring new capabilities.

2. The research suggests that technology transformation is also a key driver of transactions. Particularly accelerating the integration of technology and technology-enabled processes which are now becoming even more important. Seven in ten respondents say they are likely to use transactions to achieve their technology related goals for their businesses.

3. Talent is the third lever. According to the survey, six in ten (60%) say they are likely to use transactions to help them build a workforce with future-ready skills, while 44 percent acknowledge that deals enable companies to acquire capabilities and skills.

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