Increased confidence driving M&A decisions to capitalize on digital transformation

Canadian executives leading the trend on rapid portfolio reviews

TORONTO, Dec. 6, 2017 /CNW/ - Canadian executives' confidence in the global economy has jumped significantly by 59% in the last 12 months, according to the EY Canadian Capital Confidence Barometer. The improved outlook is key to strengthening the merger and acquisition (M&A) market, driving executives to actively review their portfolios and capitalize on the transformative potential of digital disruption.

"Canadian executives aren't being misled by short-term market measures", says Doug Jenkinson, a partner in EY's Transaction Advisory Services practice. "Respondents are confident in the direction the economy is going, keeping a keen eye to the future recognizing that digital transformation is confronting and blending many sectors. Executives are on the front foot of disruption and searching for sustainable long-term value creation through acquisitions, alliances and joint ventures."

Confidence driving investments and dealmaking

Stronger than expected turnaround in the Eurozone, tied with continued economic strength in the US and China, is fuelling Canada's investment intentions.

• 78% see the global economy improving, compared with 19% 12 months ago
• 60% see the local economy improving, compared with 38% 12 months ago
• 61% intend to pursue acquisitions in the next year

"Transactions are highly dependent on the market," says Jenkinson. "This economic buoyancy is in turn boosting executives' outlook for corporate earnings and stock market valuations, leading to increased confidence in investment and dealmaking intentions."

Rapid portfolio review to get ahead of the digital wave

Canadian companies across all industries are actively reviewing their portfolios and other market opportunities in order to capitalize on digital trends.

• 62% are reviewing their portfolio quarterly, compared to only 30% of US respondents
• 41% are buying, forming alliances or creating joint ventures with digital companies

"Canada has a robust deal pipeline, and it doesn't show signs of stopping," says Jenkinson. "Speed of response will be critical to capitalizing on new opportunities. Executives need to continue fast-tracking the frequency of their portfolio review so that they're able to identify emerging trends, recycle capital and ensure they have the right mix of assets to compete."

Read EY's full Canadian Capital Confidence Barometer for more information.

About EY
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SOURCE EY (Ernst & Young)