As they seek agility in a disrupted world, companies' priorities are evolving. Respondents to KPMG's 2019 Global CEO Outlook, which surveys 1,300 CEOs from the world's largest organizations, rank strategic alliances as the single most popular route to growth. Organic growth is second, innovation third, with M&A fourth and joint-ventures (JVs) in fifth place.
There is a growing recognition that organizations across virtually every industry now compete in a connected ecosystem, calling for ever-closer ties to new and existing players to access new technologies and capabilities.
Almost two-thirds (66 percent) of CEOs we surveyed believe third-party partnerships are “the only way” their company can achieve the agility it needs. Amongst the options they favor are accelerator or incubator programs for start-up firms, industry consortia focused on development of innovative technologies, and collaborating with innovative start-up firms like fintechs, insurtechs and healthtechs.
Transforming through transactions: Deals, partnerships and divestitures can bring much-needed agility.
Partnering, as well as M&A, can help to access new capabilities, a trend partly reflected in the continued rise in cross-sector deals, according to KPMG analysis. Some businesses are choosing to form joint-ventures with mid-sized technology firms, while others may acquire smaller technology start-ups, to access data analytics and innovation resources.
But it's not just about technology; in the consumer and retail sector, for example, a growing number of deals are aimed at reshuffling portfolios, either to focus on core strengths, or to move into new, growing sectors, often related to lifestyles trends such as healthier eating, sustainable consumption and ethically sourced food. Such transactions are sparking greater interest among both corporate and private equity players.
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Technology and Private Equity