Does seizing competitive advantage mean deals take center stage?

More documents

Recommendations

Info

Mexico key findings Mexico 41+59+M 59+41+M 28+72+M 29+71+M 41% 59% 28% 29% Global 57+43+M 49+51+M 18+82+M 32+68+M expect to pursue acquisitions in the next 12 months 57% have five or more deals in the pipeline 49% say change in customer behavior is the main strategic driver for pursuing acquisitions outside of their own sector 18% believe volatility in currencies, commodities and other capital markets poses the greatest risk to M&A strategies 32%
Disruptive trends and political uncertainty fail to dampen dealmaking enthusiasm among Mexican executives The political uncertainty raised by the upcoming US elections has reverberated across Mexico’s economic landscape. However, even despite this volatility, expectations around dealmaking have rebounded from six months ago, according to the latest edition of our Capital Confidence Barometer. Mexico continues to be challenged by a range of macro factors. The lead-up to the US general election in November 2016 has placed at center stage not only a threatened wall across the US–Mexico border but also the ongoing viability of the North American Free Trade Agreement (NAFTA). This, coupled with a strong US dollar juxtaposed against a weaker Mexican peso, has led a majority of Mexican executives to see the global economy as stable to declining. Locally, however, they are more optimistic — the number of Mexican executives who see the domestic economy as improving has jumped to 31% from only 12% six months ago. Domestic market fundamentals are also up across the board, suggesting a rebound in confidence. Although dealmaking intentions have not reached the highs of 2015, Mexican executives are feeling more optimistic than they were six months ago. The percentage planning to pursue deals in the next 12 months is above the global average, and deal fundamentals appear to support this renewed confidence: Executives are feeling more positive about the number and quality of acquisition opportunities, as well as the likelihood of closing deals, than they were in April 2016. Another indicator of confidence is the number of deals in the pipeline. Almost 60% of the executives we surveyed suggested they are examining five or more deals, and more than half expect that number to increase in the coming year. And while the deals are smaller (more than half are focused on deals between US$251 and US$1b), these deals will help Mexican companies grow market share and be nimbler in responding to changes in customer behavior. We see these disruptive challenges spurring Mexican executives to pursue both organic and inorganic routes to growth. In the next 12 months, nearly a quarter of Mexican executives see changing customer behavior and expectations as most disruptive to their core business, with advances in technology and digitization following closely behind. (By contrast, global executives say they are more focused on sector convergence and increasing competition as threats.) In response, 30% of Mexican respondents say they are looking at joint ventures and alliances to address these disruptive trends and take advantage of a changing landscape. A final outcome in the US election should help calm the uncertainty that has dampened macroeconomic optimism in Mexico over the last several months. This, coupled with a quelling in currency volatility, should give Mexican companies more buying power both domestically and in their target markets worldwide. Olivier Hache Managing Partner Transaction Advisory Services Mancera, SC Capital Confidence Barometer | 1
Page 1: Global Capital Confidence Barometer
Page 5 and 6: Corporate strategy Disruptive trend
Page 7 and 8: M&A outlook A healthy deal pipeline
Page 9 and 10: Mexico contact For a conversation a
Page 12: EY | Assurance | Tax | Transactions

Does seizing competitive advantage mean deals take center stage?

Create successful ePaper yourself

Delete template?

Save as template?