In PwC Canada’s most recent Global CEO Survey, CEOs reported a record level of uncertainty surrounding economic growth and that more than half of the Global and Canadian CEOs surveyed believe the rate of global GDP growth will decline.
The CEOs of today and tomorrow face a complex future and a market that is anything but predictable. Market turbulence from fears of a pandemic is an impactful current example. All of this to say: making decisions on where to invest is tricky, so how can Canadian CEOs stay on top of this uncertain landscape?
“Making informed, strategic decisions, especially for large business transactions like a deal, is as challenging today as it has ever been,” says Philip Heywood, BC Region Deals Leader at PwC Canada.
“Our view at PwC is that BC companies need to ready themselves, be agile and have both the confidence and strategy to navigate their way through these challenges, taking advantage of opportunities as they arise.”
The list of priorities top of mind for business leaders can be extensive, with some of the most highly ranked concerns from CEOs globally being technology adoption, climate change and social responsibility, trade wars and economic uncertainty.
PwC found that 82% of Canadian CEOs ranked uncertain economic growth as a threat to their organization’s growth prospects. “Canadian CEOs are still focused on deals as a means to drive growth in 2020 and beyond,” says Heywood.
According to PwC’s survey, 49% of Canadian CEOs have plans to drive growth through a merger or acquisition in 2020 while 54% were exploring a joint venture. So, what does PwC suggest for Canadian CEOs looking not only to stay afloat but succeed in this volatile environment?
“The critical lense is about value creation”, says Heywood. “Investors have high expectations and are looking for value growth and return on investment. There is capital available for the right opportunities, but expectations from investors are high.”
“During uncertain times, CEOs shouldn’t allow weaker aspects of the business to distract from what is really driving value and the best return for investors,” says Heywood.
“Now is a good time to take a hard look at your portfolio of assets, your business segments and consider whether there is an offshoot that should be divested now in order to free up resources that can be better deployed elsewhere.”
Heywood suggests this is the time to invest in desired capabilities that enhance the core business or add talent to the workforce. Additionally, Heywood believes there is no room for haphazard decision-making in this data-driven world and that gut and intuition are largely reactions of the past.
“Both buyers and sellers need to have clear data-driven evidence of value and growth prospects through robust analysis,” says Heywood.
“Sellers need to be able to demonstrate, and support, their value proposition and manage through an ever-increasing level of buyer scrutiny–to be able to provide the data that the buyers need to complete both financial and non-financial due diligence.”
In the same respect, Heywood suggests it is very important that buyers take in both financial and non-financial aspects equally when considering a deal.
“58% of Canadian dealmakers said that business culture or culture misalignment between the buyer and the target inhibits their ability to realize value,” adds Heywood. “Frankly, we see more deals fail because of incompatibility with different corporate cultures than we do over price or financial issues.”
As with anything in life, having a plan and preparedness are paramount to success. At PwC, experts are standing by to help you forge a prosperous path in today’s new world and navigate the obscurity of tomorrow.
Have questions? For more information about the PwC Deals team and how they can help you achieve your growth goals, please visit www.pwc.com/ca/deals and search for the BC contacts. Or contact Philip Heywood at [email protected].
