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October 2016 | ey.com/ccb/technology | 15th edition Technology Capital Confidence Barometer Drive for innovation and growth sustains record technology M&A

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Page 1: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

October 2016 | ey.com/ccb/technology | 15th edition

Technology

CapitalConfidenceBarometerDrive for innovation and growth sustains record technology M&A

Page 2: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Key findings

Macroeconomic environmentExecutives view the global economy as stable but recognize an increase in downside risks.

Corporate strategySector convergence, digitization and innovation are most disruptive.

M&A outlookTechnology executives see current trends continuing in the global M&A market.

62%

0%

49%

50%

47%

41%

53%

60%

48%

expect current M&A trends to continue

see the global economy strongly improving

see digitization disrupting their core business

intend to pursue deals in the next 12 months

see a slowdown in global trade

expect their growth to be inorganic

now use data analytics to identify growth options and M&A targets

view political instability in their home market as a risk to core business

say sector convergence is increasing competition

Page 3: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

3Capital Confidence Barometer |

Tech sector’s challenge: how to perform in a low-growth worldWhat is driving tech M&A at such high, sustained levels? Technology executives in this 15th Capital Confidence Barometer say it is the need to innovate and grow — and acquire the talent to do both. That’s simple enough, except for the increasingly complicated economic, business and technology trends around us.

Growth has been a challenge in today’s persistently slow economy — a problem that survey respondents now see exacerbated by a decline in trade due to economic nationalism and protectionism. Speaking of which, national politics has risen on executives’ watch lists as a distinct risk factor. Another mounting concern is access to credit, which has been far from problematic in previous Barometers. What’s more, earlier troubles, such as volatility in currencies, commodities and capital markets, have not gone away.

Let’s pause this litany of ills to say that the tech sector’s confidence in corporate earnings has bounced back over 20 points from our last Barometer. Rather than rolling over in the face of slow growth, geopolitical uncertainty, and concerns over both equity and credit, technology executives appear to be “rolling with the punches.”

This tenacity shows both in deals recently done and in dealmaking intentions going forward. EY’s Global technology M&A report shows that in the third quarter of this year, the aggregate value of disclosed deals was US$155.5 billion — the third-highest quarter on record. Deal volume at the end of the quarter was only 4% behind 2015’s post-dotcom-record pace. And in this Barometer, tech respondents’ appetite for deals has sharply increased in the past six months, with half expecting to actively pursue deals in coming months.

Yes, it’s a complicated world for dealmakers — even today’s deal fundamentals are mixed in this report. At the same time, executives in this survey see competition coming from within and outside their own sector — including competition for talent. And, innovation is both a goal and a disruption of core business strategies — and it is unabating.

As tech and non-tech companies alike are being disrupted by innovative digital technologies — as they face the same unforgiving economic and business environment — they are turning to M&A in search of solutions.

Jeff LiuEY Global Technology Industry LeaderTransaction Advisory Services

See page 14 for the five key questions executives need to ask themselves as they invest for growth in today’s market.

Page 4: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Macroeconomic environment

Few technology executives (17%) see global economic improvement on the horizon, and their concerns are compounded by a slowdown in international trade flows due to economic nationalism and protectionism. Nearly half of survey respondents (47%) cite slumping trade as first or second on the list of economic risks to their core business.

Executives see significant political instability both at home (60%) and abroad (29%). Also cited as one of the greatest risks to core business is the ongoing volatility in currencies, commodities and capital markets (52%).

What is your perspective on the state of the economy today at the global level?Q:

What do you believe to be the greatest economic risk to your core business over the next 6-12 months? Select your top two risks in order of importance.Q:

Survey reflects slow economy, slumping trade

Political instability raises risk

4 | Capital Confidence Barometer

17

34

41

0

1

39

50

61

10

2114

9

11

Stronglydeclining

Modestlydeclining

Stable (GDPchange = samegrowth as2015)

Modestlyimproving

Stronglyimproving

1

Oct 16 Apr 16 Oct 15

Percent

An unexpected rapid slowing of growth in China

Economic and political instability in the European Union (incl. Brexit)

Slowdown in global trade flows(incl. economic nationalism, protectionism, industrial policy)

Global geopolitical instability (incl. terrorism, border and territorial disputes)

Political instability in your home country/region (incl. the rise in populist/nativist politicians and parties)

High volatility in currencies, commodities and othercapital markets

Most important Second most important

17

35

25

35

15

14

39

8

4

3

3

2

Percent

Page 5: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Macroeconomic environment

Credit and equity are both the subject of uncertainty that should be factored into any M&A market analysis. This Barometer has seen a steep drop in confidence regarding credit availability — of 41 points over the past year. Roiling credit markets are such key developments as an expected increase in US interest rates later this year, a possible tapering of quantitative easing policies in Europe and Japan, and the entry of European central banks into the corporate bond market. Equity valuations are also seen as increasingly problematic. Where over half of technology respondents (56%) were upbeat about capital markets a year ago, under a third (31%) are today.

For all the macroeconomic challenges, confidence has rebounded in corporate earnings in the past six months, although still below year-ago levels. Sixty percent of technology executives describe themselves as confident in this Barometer; this indicator is 22 points higher than in the last survey.

Access to credit becomes a concern

Confidence bounces back in corporate earnings

Oct 15 Apr 16 Oct 16 Oct 15 Apr 16 Oct 16 Oct 15 Apr 16 Oct 16 Oct 15 Apr 16 Oct 16

Corporate earnings Credit availability Equity valuations Short-term market stability

Positive Stable Negative

8

17

75

5

57

38

16

24

60

616

78

15

38

47

11

52

37

10

34

56

16

42

42

14

55

31

10

16

74

8

45

47

6

44

50

Percent Percent Percent Percent

5Capital Confidence Barometer |

Responses signal renewed confidence in corporate earnings, but credit markets may tighten.

Page 6: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Corporate strategy

Digitization and cross-sector competition/convergence are cited as most disruptive to core business. The former is driving the latter in the technology sector — and across all industry sectors. Nearly half of technology executives (49%) cite digitization among their top two disruptors, as do 43% of executives from across all sectors. Nearly half of technology executives (48%) also cite the resulting industry blur among their top two disruptors, as do 46% of executives from across all sectors.

In technology sector boardrooms, digitization (65%) and cross-sector competition/convergence (66%) also rank as the top two agenda items. Shareholder activism remains top of mind (30%). Similar discussions are taking place in boardrooms across all industries, as seen in the chart below.

From where do you see the most disruption to your core business in the next 12 months? Select your top two disruptors in order of importance.Q:

Which of the following will be most prominent in your boardroom during the next six months? Select top two issues in order of importance.Q:

Cross-cutting digital transformation at work

Boards also prioritize digital agenda, with eye on activist shareholders

6 | Capital Confidence Barometer

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Primary disruptor Secondary disruptor

Percent Percent

Global Technology respondents

23

23

25

23

20

12

18

15

15

8

15

8

9

34

22

11

15

6

13

7

13

16

12

37

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Primary disruptor Secondary disruptor

Percent Percent

Global Technology respondents

23

23

25

23

20

12

18

15

15

8

15

8

9

34

22

11

15

6

13

7

13

16

12

37

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Primary disruptor Secondary disruptor

Percent Percent

Global Technology respondents

23

23

25

23

20

12

18

15

15

8

15

8

9

34

22

11

15

6

13

7

13

16

12

37

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Primary disruptor Secondary disruptor

Percent Percent

Global Technology respondents

23

23

25

23

20

12

18

15

15

8

15

8

9

34

22

11

15

6

13

7

13

16

12

37

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Changing customer behaviorand expectations

Advances in technologyand digitization

Increasing globalization

Industry regulation

Product innovation

Sector convergence/increasecompetition from companies in other sectors

Primary disruptor Secondary disruptor

Percent Percent

Global Technology respondents

23

23

25

23

20

12

18

15

15

8

15

8

9

34

22

11

15

6

13

7

13

16

12

37

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Most important Second most important

Percent Percent

Global Technology respondents

34

20

48

17

19

10

16

9

12

9

11

10

8

42

20

10

11

55

9

5

6

7

6

6

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Most important Second most important

Percent Percent

Global Technology respondents

34

20

48

17

19

10

16

9

12

9

11

10

8

42

20

10

11

55

9

5

6

7

6

6

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Most important Second most important

Percent Percent

Global Technology respondents

34

20

48

17

19

10

16

9

12

9

11

10

8

42

20

10

11

55

9

5

6

7

6

6

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Most important Second most important

Percent Percent

Global Technology respondents

34

20

48

17

19

10

16

9

12

9

11

10

8

42

20

10

11

55

9

5

6

7

6

6

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Portfolio analysis, including strategic divestment (spin-off/IPO)

Sector convergence/increased competition from companies in other sectors

Impact of increased economic and political instability

Identifying opportunities for growth, including M&A, JVs and alliances

Shareholder activism, including returning cash to shareholders

Impact of digital technology on your business model, e.g., new sales channels/markets, IoT, cybersecurity

Most important Second most important

Percent Percent

Global Technology respondents

34

20

48

17

19

10

16

9

12

9

11

10

8

42

20

10

11

55

9

5

6

7

6

6

Page 7: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Corporate strategy

Many take the inorganic route to growth

Automation + jobs = productivity?

In today’s low-growth economy, some 41% of technology executives are looking beyond organic development to find growth in acquisitions, joint ventures and alliances such as “industrial mash-ups.” This new form of dynamic and increasingly automated partnering in the business-to- business (B2B) market delivers the potential for growth with greater agility and lower cost.

Technology executives say they are creating jobs (53%) even while seeking to gain efficiencies from greater automation (73%), such as robots, algorithms, the “gig economy,” flexible working, and big data and analytics. Almost a third of tech respondents (31%) are duplicating automated and non-automated processes until they see the benefits of automation. The majority (60%) are still seeking the right balance between automation and workforce management. In all of these survey responses, technology and non-technology executives are generally aligned.

From where do you see growth within your company coming over the next 12 months?

How do you see automation impacting productivity within your company?

How do you think that advances in technology will change your employment or talent strategy? Select all that apply.

Q:

Q:

Q:

7Capital Confidence Barometer |

Organic

Mergers and acquisitions

Joint ventures

Alliances

59

11

8

22

Percent

Reduce workforce numbers

Create jobs/hire talent

Shift skills and talent within ourbusiness to gain efficienciesfrom greater automation

Percent

73

53

16

We see an increase in productivitydue to more automated processes

We are still duplicating automatedand non-automated processes

Prior investments in automationhave not proven to be successful

We are not sure

3725

6

32

Percent PercentGlobal

3629

4

31

Technology respondents

Page 8: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

M&A outlook

What is your expectation for the M&A market in the next 12 months at the global level?

Do you expect your company to actively pursue mergers and acquisitions in the next 12 months?

Q:

Q:

The vast majority of tech respondents to our survey (91%) see the technology M&A market remaining in record territory. That’s where EY’s Global technology M&A report again found it in 3Q16. Aggregate disclosed deal value for the quarter was US$155.5 billion — the third-highest quarter on record. Aggregate disclosed deal volume of 911 represented a 12% decline from the previous quarter and a 15% drop from the year-earlier quarter. That said, tech respondents’ appetite for deals has rebounded in the past 6 months, with half expecting to actively pursue M&A in the next 12 months.

Technology executives see current M&A trends continuing

8 | Capital Confidence Barometer

Decline

Stay the same

Improve

Percent

2952

806059

6243

1838

40

95

221

Oct 16 Apr 16 Oct 15 Apr 15 Oct 14

CCB average 42% Technology Global

Apr Oct

2016

Apr Oct

2015

Apr Oct

2014

Apr Oct

2013

Apr Oct

2012

Apr Oct

2011

Apr Oct

2010

Expectations to pursue an acquisition

57%

40%

50%

45%

59%58%

56%44%

40%34%

29%

32%

31%

50%

40%

57%

41%

59%

57%

28%

30%

33%

35%

20%

25%34%

38%50%

Page 9: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

M&A outlook

What is the main strategic driver for pursuing acquisitions in your current sector?Q:

What is the main strategic driver for pursuing an acquisition outside your own sector?Q:

Driving deals: Search for growth, innovation — and the talent to deliver them

Technology companies are doing deals for different reasons inside and outside their own sector. Within the technology sector, deals aim primarily at growing market share (46%) and addressing customers’ changing digital behaviors (43%), executives say. They are making acquisitions in other sectors primarily to acquire talent (76%) and new product or service innovation (41%). In the hunt for talent, the competition can cut both ways — companies in all industries are doing deals to acquire talent outside their own sectors (52%).

9Capital Confidence Barometer |

React to customer behavior

Acquiring talent

Acquiring innovative start-ups

Acquiring technology or new production capabilities

Move into new geographies

Growing market share

Most important Second most important

Percent

28

18

20

7

18

14

16

9

11

32

7

20

Acquiring talent

Access to new materials or technologies/digitization

Changes in customer behavior

New product or service innovation

Access to differentiated customers, details or databases

Reacting to competition Acquiring talent

Access to new materials or technologies/digitization

Changes in customer behavior

New product or service innovation

Access to differentiated customers, details or databases

Reacting to competition

Most important Second most important

Percent Percent

Global Technology respondents

19

11

42

34

19

14

19

18

18

9

13

39

12

9

17

17

17

8

8

33

8

0

8

8

Page 10: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

M&A outlook

How many acquisitions do you expect to complete in the next 12 months?Q:

Over half of technology executives pursuing deals (54%) expect to complete a single acquisition within a year, and the rest plan more. Over a third of them (38%) say they have more than five deals in their pipeline. The vast majority (98%) of these deals are in the range of US$1 billion or under. Eighty percent of tech respondents would characterize their dealmaking volume as unchanged over the past 12 months, and most (79%) expect no real change in the next 12 months.

Deal pipelines continue to flow

How many deals do you currently have in your pipeline, regardless of deal size?

What is your largest planned deal size in the next 12 months?Q: Q:

10 | Capital Confidence Barometer

1

2

3

4

>5

Percent

Technology respondents

120

12

84

8

1310

15

1331

15

5455

50

Oct 16 Apr 16 Oct 15

1

2

3

4

>5

Percent

Technology respondents

3814

19

616

12

718

23

163638

3316

8

Oct 16 Apr 16 Oct 15

1

0

1

10

1

1

3837

26

6053

US$1.1b–US$5b

US$251m–US$1b

US$0–US$250m

Greater than US$5b

72

Oct 16 Apr 16 Oct 15

Percent

Technology respondents

Page 11: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

M&A outlook

Deal fundamentals are mixed

What is your level of confidence in the following at the global level?Q:

Technology executives are positive about the number of acquisition opportunities on the market (70%) but less impressed with their quality (38%) and the likelihood of closing (32%). Sellers’ expectations of transaction value are higher than buyers’ (68%), and this valuation gap is seen by half of respondents to be increasing.

How do sellers’ expectations of transaction valuations currently compare to those of buyers’?

How do you expect this valuation gap to change in the next 12 months?Q: Q:

57

50

51

4436

47

67Decrease

Remain atcurrent levels

Increase

2

Oct 16 Apr 16 Oct 15

Percent

Technology respondents

7

7

16

38

61

56

3046

26

29No gap

The gap issmall(<10%)

Somewhathigher(10%–25%)

Significantlyhigher(25% or more)

2

Oct 16 Apr 16 Oct 15

Percent

Technology respondents

11Capital Confidence Barometer |

32

42

62

47

38

75

7054

80

Percent

Increase

Remain at current levels

Decrease

50%57%51%

44%

7% 2%

36%47%

Oct–16Apr–16Oct–15

Oct 16 Apr 16 Oct 15

Likelihoodof closingacquisitions

Qualityof acquisitionopportunities

Numberof acquisitionopportunities

Page 12: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

M&A outlook

Which are the top destinations in which your company is most likely to pursue an acquisition in the next 12 months (including your domestic market)?

Q:Despite concerns expressed by survey respondents about the rise of nationalism and the potential for protectionist measures, cross-border deals are in the crosshairs. Over a third of technology executives (39%) say they are most likely to pursue an overseas acquisition in the next 12 months. In 3Q16, EY’s Global technology M&A report recorded a new quarterly record for cross-border disclosed value deals — US$80.8 billion, or 85% higher than the previous record set in 2Q15. Tech respondents’ top five acquisition destinations are the US, Germany, Canada, China and the UK (in that order).

Cross-border deals in the crosshairs

12 | Capital Confidence Barometer

Top five destination countriesTop destinations are based on a weighted scoring of respondents’ top three investment destinations in order of importance.

5

UK

1

US

4

China

2

Germany

3

Canada

39

31

30

Intra-regional

Domestic

Outbound

Percent

Despite Brexit concerns, the UK remains a top investment destination for the technology sector.

Page 13: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

Fully 94% of tech respondents say they have canceled or failed to complete a planned acquisition in the past 12 months — primarily due to price (45%). Over half of tech respondents (54%) are using analytics and big data to measure appropriate valuations of targeted assets, among other important aspects of their deals. After closing, deals can fail to meet expectations for many reasons — mainly poor planning, tech respondents say.

M&A outlook

If you have either failed to complete or canceled a planned acquisition in the past 12 months, what was the primary reason? Select your top two reasons.

How do you use analytics and big data for executing your M&A process and strategy? Select all that apply.

For acquisitions completed recently, what was the most significant issue that contributed to deals not meeting expectations? Select all that apply.

Q:

Q: Q:

Dealmakers prepared to walk away from the table

Underestimated the challenges of IT integration

Underestimated investment to grow products and revenue

Underestimated the cultural challenges

Underestimated the senior management time required

Poor identification and quantification of synergies

Loss of sales and customers due to lack of planning

Percent

42

38

41

39

40

36

34

35

32

34

28

36

We have not completed an acquisition recently that did not meet our expectations

Uncertain

Technology Global

12

14

1

2

To review our current portfolio of assets

We are not using at all

To enhance the post-closing monitoring and optimization of the investment assumptions

To enhance the due diligence process

To identify growth options and potential targets

To better identify synergies and determine appropriate valuation of the targeted asset

Percent

54

55

53

54

51

47

38

37

25

27

4

5

We are not using, but we are considering it

Technology Global

4

4

13Capital Confidence Barometer |

Concerns about regulatory or antitrust reviews

Economic and political instability

Competition from other buyers

Issues uncovered during due diligence

Investor or board scrutiny

Gap between buyer and seller expectations too wide

Most important Second most important

Percent

27

18

21

12

18

25

16

11

13

11

5

23

Page 14: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

With the deal table permanently reset, these are the better questions executives needs to ask themselves to maximize their growth strategy in today’s market

1 2Will geopolitical challenges derail your growth strategies?Political uncertainty is increasingly affecting global trade and credit markets. Executives who do not proactively consider it or effectively respond in their approach to dealmaking run the risk of poorly executed growth strategies.

Are you capitalizing on the breadth of deal structures to realize your strategic objectives?Amid unprecedented change, many companies have to reinvent themselves fast — organically and through inorganic investments. Beyond traditional M&A, joint ventures, alliances, partnerships and industrial mash-ups are emerging as alternatives to effectively secure deal value.

14 | Capital Confidence Barometer

Page 15: October 2016 | ey.com/ccb/technology | 15th edition ...… · What is your perspective on the state of the economy today at the global level? Q: What do you believe to be the greatest

3 4 5Are you enhancing or destroying the value of acquired innovation?The rapid rise of new ways of doing business, predominantly through digital channels and unique ways of utilizing labor, is fueling dealmaking aimed at securing innovation. Companies that adapt their strategies and operating models not only protect but take advantage of technology and innovative thinking and will be best placed to seize competitive advantage.

Is an off-the-shelf approach to integration the best recipe for success?Realizing full transaction value has historically been difficult to achieve. With the pace of dealmaking intensifying and the realization of back office and customer value enhancement nonnegotiable, a disciplined, C-suite-sponsored integration strategy unique to the deal scenario is crucial.

Are you using analytics and big data to bring greater clarity to increasingly complex deals?Complexity around the deal table can be simplified through the use of transaction analytics. Companies are looking at an increasing number of targets, often in unfamiliar industries. With multiple stakeholder considerations, ensuring access to the skills to find better answers to complex capital strategy questions is an imperative.

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The Global Capital Confidence Barometer gauges corporate confidence in the economic outlook and identifies boardroom trends and practices in the way companies manage their Capital Agendas — EY’s framework for strategically managing capital.

It is a regular survey of senior executives from large companies around the world, conducted by the Economist Intelligence Unit (EIU). Our panel comprises selected global EY clients and contacts and regular EIU contributors.

• In August and September, we surveyed a panel of more than 1,700 executives in 45 countries; nearly 50% were CEOs, CFOs and other C-level executives. There were 419 executives surveyed from the US.

• Respondents represented 18 sectors, including financial services, consumer products and retail, technology, life sciences, automotive and transportation, oil and gas, power and utilities, mining and metals, diversified industrial products, and construction and real estate.

• In this survey, we had 255 respondents from technology companies, of which 51% were CEOs, CFOs and other C-level executives.

• Technology companies’ annual global revenues were as follows: less than US$500m (41%); US$500m–US$999.9m (27%); US$1b–US$2.9b (7%); US$3b–US$4.9b (13%); and US$5b or greater (12%).

• Global company ownership was as follows: publicly listed (66%), privately owned (33%), family-owned (2%) and government-/state-owned (1%).

About this survey

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ContactsContactsFor a conversation about your capital strategy, please contact us:

Ranjan Biswas India +91 806 727 5131 [email protected]

Tim Dutterer Co-Leader Technology, Parthenon-EY +1 415 264 8442 [email protected]

Staffan Ekström Global Telecoms Leader — Transactions and TMT Leader, Nordics +46 8 520 593 90 [email protected]

Arjan Groen Operational Transaction Services Netherlands +31 884 071 087 [email protected]

David Hedley US Technology M&A Leader +1 415 984 7128 [email protected]

Neil Hutt United Kingdom +44 1189 281535 [email protected]

Transaction Advisory Services (TAS) technology contacts

Ben Kwan TAS and TMT Market Segment Leader Greater China +852 2849 9223 [email protected]

Simon Pearson United Kingdom +44 20 7951 0418 [email protected]

Barak Ravid Co-Leader Technology, Parthenon-EY +1 415 894 8070 [email protected]

Dr. Carsten F. Risch Germany +49 30 25471 21426 [email protected]

Eric Sanschagrin TMT Transaction Advisory, EMEIA +44 207 951 9650 [email protected]

Global Technology Sector

Greg Cudahy EY Global Leader — TMT Technology, Media & Entertainment and Telecommunications +1 404 817 4450 [email protected] Technology service line leaders

Jeff Liu EY Global Technology Industry Leader Transaction Advisory Services +1 415 894 8817 [email protected]

Channing Flynn EY Global Technology Industry Leader Tax Services +1 408 947 5435 [email protected]

Dave Padmos EY Global Technology Industry Leader Advisory Services +1 206 654 6314 [email protected]

Guy Wanger EY Global Technology Industry Leader Assurance Services +1 650 802 4687 [email protected]

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EY | Assurance | Tax | Transactions | Advisory

About EYEY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing, we play a critical role in building a better working world for our people, for our clients and for our communities.

EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients. For more information about our organization, please visit ey.com.

About EY’s Transaction Advisory ServicesHow you manage your capital agenda today will define your competitive position tomorrow. We work with clients to create social and economic value by helping them make better, more-informed decisions about strategically managing capital and transactions in fast-changing markets. Whether you’re preserving, optimizing, raising or investing capital, EY’s Transaction Advisory Services combine a unique set of skills, insight and experience to deliver focused advice. We can help you drive competitive advantage and increased returns through improved decisions across all aspects of your capital agenda. About EY’s Global Technology SectorEY’s Global Technology Sector is a global network of more than 21,000 technology practice professionals from across our member firms, all sharing deep technical and industry knowledge. Our high-performing teams are diverse, inclusive and borderless. Our experience helps clients grow, manage, protect and, when necessary, transform their businesses. We provide assurance, advisory, transaction and tax guidance through a network of experienced and innovative advisors to help clients manage business risk, transform performance and improve operationally. Visit us at ey.com/technology.

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This material has been prepared for general informational purposes only and is not intended to be relied upon as accounting, tax or other professional advice. Please refer to your advisors for specific advice.

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