As Many Sellers as Buyers

The amounts of acquisitions and divestitures are headed in opposing directions, according to an E&spamp;Y survey.
Andrew SawersApril 23, 2012

Companies around the world are as much interested in divesting as they are in acquiring, with just 31% saying they expect to make an acquisition in the next 12 months and the same number expecting to divest, according to the latest M&A research from Ernst & Young.

But the trend is going in opposing directions: a 24% decline in acquisition intentions, which has to be set against a 20% rise in those planning disposals. To be sure, with corporate cash balances high and credit constraints lower than they have been, “the fundamentals for M&A are stronger than they have been for some time,” according to the firm’s Global Capital Confidence Barometer.

Nevertheless, “the M&A market continues to be restrained by conservatism,” according to the report, which is based on the responses of a panel of more than 1,500 executives surveyed in February and March of this year. The 770 CEO, CFO, and other C-level respondents include executives in companies from 57 countries in 40 sectors.

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For their part, the executives who predict their companies will divest indicate their strategies will shift “from contingency to core strategy,” according to E&Y. “A key focus for companies is to streamline their organizations and make decisions about the businesses in which they should be competing.”

Andrew Sawers is editor of CFO European Briefing, a CFO online publication.