A new survey by EY of 12,000 global CEOs revealed that 98% of CEOs are anticipating an economic downturn, and more: they are split down the middle on whether it will be moderate or severe, temporary or persistent. According to the authors, divergent views on the economic outlook among global CEOs underline the uncertainty that looks set to define the business environment in 2023. More than half (55%) indicated some agreement with the statement that this recession will be worse than the global financial crisis in terms of how deep the downturn is and how long it lasts. 

Yet, many CEOs see potential reward on the other side of the risks and identify opportunities to emerge from the downturn in a position stronger than their competitors. Of the CEOs polled, 46% said they anticipated pursuing merger and acquisitions over the course of the year. Portfolio transformation is still high on the agenda, but deals will more likely be between allies.

“Given the unique conditions, experience with downturns might be less important than understanding new geopolitical tensions, supply chain disruption, talent shortages and the ongoing COVID-19 pandemic fallout helping fuel the slowdown. Leaders in this current generation have built a new set of skills during a global pandemic that could serve them well now.”, EY Global executives Andrea Guerzoni, Nadine Mirchandani and Barry Perkins highlight.

In addition to their strategic geopolitical responses, CEOs are addressing a mix of short- and longer-term investment priorities:

• Identifying restructuring opportunities
• Increasing outsourcing and managed services to reduce or manage fixed costs and shift risk
• Boosting corporate finance, treasury and balance sheet management

This will lay the foundations to create long-term sustainable value for all stakeholders, the authors conclude:

“Given the robust deal appetite, CEOs clearly still recognize the accelerated transformation opportunities of M&A and are pursuing transactions to help position their organizations for future growth. There is still a strong appetite for cross-border investments, but CEOs will be more selective in who they do deals with in 2023 and will pursue transactions within friendly pockets rather than applying a truly global approach.”

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Source: EY Global