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.

Drive Business Strategy and Growth

Drive Business Strategy and Growth

Learn how NetSuite Financial Management allows you to quickly and easily model what-if scenarios and generate reports.

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.