High Valuations are Greatest Corporate Challenge of 2018 while Black Swan Event, e.g., Brexit, is of Little Concern, According to Merrill Insight™ Poll
42% of EMEA survey participants believe high valuations are greatest corporate challenge; one-third cite political and regulatory uncertainty
LONDON, Feb. 12, 2018 /PRNewswire/ -- As part of a Merrill Insight™ event held in late January, Merrill Corporation, a global provider of virtual data rooms and services for regulatory disclosure, conducted a statistically relevant poll on the outlook for corporate development in 2018. The results showed 42 percent of EMEA participants (corporations and advisors) believe high valuations are the greatest corporate challenge of 2018.
"You think sellers would take advantage of high valuations, but the flipside is the prospect of even higher valuations down the road", says Jonathan Rothenberg, senior vice-president, corporate development and M&A at GlobalLogic, speaking at the Merrill Insight™ event.
- A third of poll participants in the EMEA region cite political and regulatory uncertainty as the greatest corporate challenge, while less than one-fifth (18 percent) believe a black swan event, such as Brexit, will mark a significant challenge for companies.
- 45 percent of poll participants say corporations would most likely use cash to grow acquisitively, despite concerns of high valuations, while a quarter of EMEA participants cite R&D, and one-fifth (21 percent) say a return of cash to shareholders. While participants in EMEA and the Americas have a similar view on acquisitive growth, a greater proportion of EMEA participants cite R&D spending versus their US counterparts.
- Almost half of the respondents (49 percent) believe ensuring successful integration is the greatest internal challenge facing corporations after an acquisition. Just one-fifth (19 percent) say it is finding and retaining top talent, while a further fifth (18 percent) feel it is integrating technology.
- There is a greater need for advisors to understand legislative and regulatory changes to help navigate specific markets, according to 43 percent of EMEA participants in the poll. Just one-fifth feel they need an advisor's assistance with corporate integration despite it being the greatest internal challenge facing corporations after an acquisition. A further one-fifth (18 percent) think an advisor would be useful for sourcing potential opportunities.
One-third (35 percent) of poll participants cite Artificial Intelligence (AI) as the trend likely to have the biggest technological impact on our lives in the next five years. A further one-third (32 percent) believe it is big data. Interestingly, the views of advisors and corporations vary significantly here. A far greater proportion of advisors than corporations cite AI. The opposite is true for views on big data.
"Artificial intelligence has the ability to change how everything works in areas of machine automation, unmanned transportation and data processing," says Justin Gans, director of acquisitions at Northrop Grumman Aerospace.
Hilary London, Chief Revenue Officer and General Manager for EMEA at Merrill Corporation comments: "We are not surprised to see high valuations as headwind for successful transactions. It is something our due diligence and regulatory reporting clients regularly mention. What is more interesting is to see EMEA respondents being far more concerned about political uncertainty and black swan events compared with US respondents". (EMEA: 33% & 18% vs US: 30% & 9%).
Merrill Insight™ panellists were Justin Gans, Director of Acquisitions and Alliances, Northrop Grumman Aerospace; Alan Konevsky, SVP and Strategic Initiatives Counsel, Mastercard; Jonathan Rothenberg, SVP Corporate Development and M&A, GlobalLogic; and Raechy Wang, Senior Director Corporate Development, Pfizer.
Link to Merrill Insight™ webinar:
www.merrillcorp.com/en/blog/merrill-insight-on-corporate-development-webinar-playback
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