Private M&A trends – Is your portfolio fit for the future?

14H06535_RFThe accelerating pace of digital disruption is leaving many companies struggling to play catch up. As new technologies power innovation, barriers to entry are shrinking in most industries, sectors are rapidly converging and business models look starkly different in comparison to just a few years ago. Executives are having to ask hard questions about what their organization is today and what it needs to be tomorrow.

In EY’s 2018 Digital Deal Economy Study, 90% of companies said they are elevating digital priorities in their strategic planning over the next two years. But organizations must avoid change just for the sake of change. And they need to do more than stick a digital plaster over their existing business.

Forging a successful digital future will likely mean buying transformative assets, as well as building capabilities in-house. We are in an era of portfolio transformation — 70% of respondents in EY’s 18th Global Capital Confidence Barometer view portfolio transformation as the top item on their boardroom agenda.

But how can you best manage your portfolio to futureproof your business?

Companies need to understand what is changing in their sector and how evolving technology will affect their business. They need to identify strategic gaps in their portfolio that may put them at a competitive disadvantage in the future. That knowledge is critical to help you decide what to buy, what to keep and what to divest.

Three key takeaways that help drive portfolio transformation in this Transformative Age:

  1. Are you utilizing tomorrow’s technologies today? Technology is a transformer. The increasing use of AI, RPA and big data is revolutionizing the way boards assess and optimize their operations — and encouraging them to make bold decisions on what to buy and sell to gain prime market position. Companies need to be certain their strategic decision-making processes enable them to take advantage of emerging technologies.
  2. Can you strategically manage your own ecosystem or will the external environment manage you? The pace of convergence and disruption is compelling companies to look across a broader landscape to understand their relative competitive position. Companies should recognize the new realities of today’s markets and develop new ecosystems to spot future growth opportunities — and identify emerging threats.
  3. Is your portfolio fit for purpose? Buying and selling can be the fastest way to transform your portfolio and reshape the future direction of your business. Being able to proactively respond quickly to emerging opportunities — and threats — is a must in the warp-speed world of business today.

Read the full feature here.

EY legal contacts:

Jean-Christophe Sabourin

 

Jean-Christophe Sabourin – Global Transaction Law Leader

 

 

richard-norbruis

 

Richard Norbruis – Global Transaction Law Markets Leader