Top executives at Indian companies are looking at merger and acquisitions as one of the main strategies to tackle disruption caused by geopolitical developments, according to the latest EY CEO survey.
As much as 96% of the CEOs polled are proactively considering sustainability as a driving factor for their M&A agenda and are creating key performance indicators (KPIs) for long-term value creation, acquiring technology and talent, according to the survey.
According to the survey, innovation is driving investment decisions. More than 40% of the CEOs were sustaining and extending their core business, the findings showed. Digital transformation dominates the investment decisions to increase the potential to lead in the emerging landscape.
“The ongoing geopolitical tensions are also triggering the Indian CEOs to take proactive measures to readjust their supply chains, with 80% of them adjusting their supply chain to manage geopolitical risks or reduce logistic costs and uncertainty,” EY said. “There is no doubt that Indian CEOs are leading from the front to combat the challenges emanating from the pandemic and geopolitical tensions,” EY India chairman Rajiv Memani said.
“More than ever, CEOs are looking at how these interconnected issues may impact their growth agendas and are building agility and the ability to pivot quickly as circumstances demand into their overall corporate strategy. They are increasingly looking at M&As as a lever for accelerating business transformation and long-term value creation.”
More and more CEOs are also focusing on innovation and M&As have become a key to business transformation, it said.
The study suggested that 22% of the CEOs would undertake M&A for laying their hands on technology, talent and production capabilities.
“(Another) 22% of the respondents have planned bolt-on acquisitions/consolidations in the near future to increase market share. Also, 11% of the respondent CEOs plan to utilise their M&A strategy to improve their sustainable footprint because of changing customer behaviour,” EY said.
The strategies seem to be a reaction to the changing geopolitical landscape triggered by the Russia-Ukraine crisis. The research also highlights the growing importance of ESG (environmental, social and corporate governance) in CEO’s agenda, with 78% of the respondents identifying ESG factors (at par with revenue growth as a factor) as extremely important or important, when it comes to strategic decision-making.
Source: Economic Times