It was found that 99% of global chief executive officers (CEOs) and 98% of Korean CEOs are planning to restructure their portfolios through strategic deals such as acquisitions and divestitures within the next year. However, global institutional investors believe that deal-making conditions will not be easy considering domestic and international circumstances, according to survey results.
EY-Parthenon, EY Hanyoung's specialized strategic consulting organization within the global accounting and consulting firm EY, released the latest results of the 'EY CEO Outlook Pulse.' This survey, which included 1,200 CEOs from 21 countries worldwide including Korea, analyzed views on macroeconomic and business outlooks, deal plans, and short- and long-term business strategies.
According to the survey, the proportion of respondents who expected the global economy to grow over the next year was 33% among global CEOs and 38% among Korean CEOs. Those anticipating easing inflation and interest rate cuts were 31% of global CEOs and 32% of Korean CEOs. Positive outlooks from Korean CEOs on geopolitical environment and capital market stabilization were 30% and 26%, respectively.
Despite overall economic uncertainty, domestic and international CEOs showed optimistic forecasts and confidence regarding individual companies' business performance. Among Korean CEO respondents, 60% expected corporate sales to grow compared to the previous year, and 60% also anticipated increased corporate profitability. Similarly, 60% of global CEOs forecasted sales growth, and 65% expected improved corporate profitability, reflecting generally positive sentiments.
The survey results indicated that respondents are considering future portfolio restructuring. Among Korean CEO respondents, 98% stated plans to pursue strategic deals within a year, with 70% planning mergers and acquisitions (M&A) and 80% planning divestitures, spin-offs, or IPOs. Compared to results from three months ago, plans for M&A increased by 34 percentage points from 36% to 70%, and plans for divestitures rose by about 50 percentage points from 30% to 80%. The response rate for pursuing joint ventures (JV) or alliances among Korean CEOs was 58%. Global CEOs responded with 42% for M&A, 71% for divestitures, spin-offs, or IPOs, and 48% for joint ventures (JV) or alliances.
Regarding reasons for pursuing M&A, both global and Korean CEOs ranked 'technology, production capacity, and startup acquisitions' as number one. However, global CEOs ranked 'market share expansion' second, while Korean CEOs identified 'securing supply chains' as second, showing a difference. This reflects that Korean CEOs of export-oriented companies perceive supply chain stability as an important strategic factor due to recent global supply chain crises and uncertainties.
However, the survey confirmed that global institutional investors hold different views from domestic and international CEOs. Only 34% of global institutional investors expected an increase in M&A volume compared to a year ago, while 61% anticipated it would remain similar to the previous year.
Byun Dong-beom, Head of EY-Parthenon at EY Hanyoung, stated, "While companies have a strong willingness to pursue M&A, the situation will not be easy. As institutional investors foresee, due to the effects of low growth trends, high interest rates, geopolitical crises, and uncertainties from the U.S. presidential election, deals are expected to be selectively concluded this year as well."
He added, "If buyers and sellers do not agree, the possibility of deal closing may decrease. Therefore, companies wishing to divest need to strategically consider performance improvement, value enhancement, and timing of sale to make their offerings attractive."
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