Nearly Half Of Businesses Think Investments In M&A Will Be Impacted In Current Climate

A recent survey carried out by Gartner has found that investment in Merger and Acquisition activity is likely to be significantly depleted due to the current ongoing economic climate.

Where Is Likely to Be Depleted?

The eye-opening survey results made two discoveries. Firstly, it found that around forty per-cent of survey respondents were concerned about investments which aimed at lowering damage to the environment and those targeted at enhancing sustainability were top of the list when businesses consider making cost cuts. Secondly, just over forty percent of survey respondents raised investment in Merger and Acquisition activity as the lowest priority for them and are consequently likely to be cut.

What Are The Investment Priorities?

The survey outcome appears to have highlighted the range of priorities which have been occupying the minds of business leaders in the current economic climate. Just under half of the persons who responded to the survey said the highest priority for those businesses appears to be people resources and bottom of the list when it comes to a cost-cutting exercise. Just under one quarter of the respondents said cutbacks in technology would be their lowest priority.

Business Balance?

The post-survey report highlights the current battle between businesses leaders who prioritise making sizeable investments in their human workforce and the need to select staff for redundancies. Just under thirty five percent of those who provided answers to the survey commented that staff-cut-backs would be one of the first actions they would take in a difficult economic climate, albeit even at the expense of investment in staff.

So What Has Caused This Mindset?

Business sentiment appears to be negative in the current economic climate. But what has caused this mindset? It appears to have been promulgated by the triple whammy of:

• rocketing inflation
• restrictions in the supply chain and
• the scarcity of skilled staff available.

How Are Businesses Responding?

Businesses appear to realise that they need to explore their alternatives now to mitigate the above risks having a negative impact on their businesses. Randeep Rathindran from Gartner commented that businesses seem to be are shifting their focus towards safeguarding their financial account margins and enhancing business efficiency. The FinTech Bullseye Report 2022 suggested several steps organisations can take to improve their situations including but not limited to:

• exploring blockchain options
• Internet of Things (IoT)
• digital technologies and
• ways to increase business performance.

Are Different Industries Reacting Differently?

Face value there does not appear to much by way of difference between the reaction of different industries. However, the survey found a stark contrast between the two broad areas of product-based and service-based industries. In the former, the results of the survey highlighted the need for these product industries to use all the advantages they have at their disposal to safeguard their investments and make-the-most-of their human resources. In stark contrast and in the latter case of service business there is a significantly higher likelihood that such businesses in the current difficult economic climate facing escalating staff costs would need to lower such costs.

Way Forward?

It would seemingly be easy for it to suddenly dawn on business owners that there is a problem in their business, for cash flow to be a serious issue and to eventually need to call for insolvency options. However, if they seek professional advice at an early stage, explore how they can manage their finances carefully, reduce workplace inefficiencies and implement more digital solutions they will be better positioned to navigate the choppy waters of the modern business world.

ASSESSING FIRMS

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THE ARTICLE WAS WRITTEN USING THE FOLLOWING SOURCES

[1] Roach, Garnet – ‘Sustainability on the chopping block as economic squeeze bites, finds Gartner survey – 26th July 2022 –Personnel Today - Sustainability on the chopping block as economic squeeze bites, finds Gartner survey | IR Magazine

[2] van der Meulen, Rob – Gartner CFO and CEO Survey Shows M&A and Sustainability Are First Areas To Face Cuts - 25 July 2022 – Gartner - Gartner CFO and CEO Survey Shows M&A and Sustainability Are First Areas to Face Cuts

[3] Gartner – Guide to Building a Finance Technology Roadmap - Guide to Building a Finance Technology Roadmap (gartner.com)