Business leaders around the world are making plans for acquisitions after the pandemic

Nearly three-quarters of global business leaders expect disruption to the supply chain and decline in consumption due to the Covid-19 coronavirus. This is the result of a survey of consulting firm EY among over 2,900 top executives worldwide.

A key finding of the Barometer of Economic Confidence, which is conducted for 22nd time, is that global leaders focus on managing the immediate impact that COVID-19 exerts on supply chains, revenue, and profitability, reorganize capital allocation and make post-crisis merger and acquisition plans.

Managers are also rethinking their business models in response to the crisis. The increasing disruption of business operations in many parts of the world has revealed the vulnerability of many companies’ supply chains, with over half (52%) taking steps to change their current organization and 41% investing in accelerating automation.

Just under half of the global business leaders (49%) report the same or lower profit margins compared to two years ago even before the current crisis, and the majority of companies (95%) are preparing for more pressure on margins due to the slowdown in the global economy.

According to participants in the Barometer of Economic Confidence, 72% of companies have already gone through business transformation initiatives – a result of the goals of higher revenue and better profitability.

In the future, the majority of companies – 72% – plan much more frequently and regularly to review their strategy and investment portfolio.

The executives say that as soon as they return to normalcy, they will focus on their priority changes – new investment in technology and digital transformation (43%), as well as a proportionate distribution of capital across the portfolio – 42%.

While the boardrooms focus on the unprecedented global health situation, executives are also planning their future after the crisis. While 54% of respondents expect a U-shaped recovery period and slower economic activity in 2020 and 2021, 38% see a recovery in the V-shaped and return to normal third-quarter economic activity. this year.

Only 8% project an economic recovery in the form of an “L” – a steady recession period with a return to economic activity in 2022.

As most companies see economic recovery in the medium term, intentions to actively seek M&A opportunities remain strong over the next 12 months (56%). When evaluating potential acquisition targets, managers will focus more on the business sustainability of companies (38%) and are prepared that company valuations will decline more (39%).