Evening Brief – 12.20.23
Global CEOs foresee a rebound in M&A activity in 2024, despite concerns about greater regulatory supervision and higher financing costs, according to a study by Teneo, the global CEO advisory firm.
The survey found that 68% of both CEOs and investors expect a sizable uptick in M&A deals in 2024. The optimism comes despite CEOs having a “tepid outlook” on the economy, with 53% expecting conditions to get worse. Investors, meanwhile, are exceedingly bullish, with 94% expecting improving conditions over the first half of 2024.
“Our Vision 2024 survey again shows divergence in the views of CEOs and institutional investors on a number of major business issues – from the macroeconomic outlook for 2024, to the ongoing impact of deglobalization, to the greatest AI-related risks,” said Ursula Burns, Chairwoman of Teneo.
In terms of deglobalization, 80% of CEOs indicate ongoing company modifications to prepare for the possibility of deglobalization, with a particular emphasis on supply chain resiliency.
Meanwhile, 20% of CEOs (more than double the rate from last year) do not plan to make extra preparations next year, indicating that a rising number of companies have already acclimated to this new normal.
CEOs and investors are also keeping AI innovation top of mind, with nearly 80% actively investing in AI – a 20-point increase from last year, according to the survey.
Yet 25% of CEO polled claimed they do not currently have the required talent to support their company’s AI deployment. Investors fear CEOs may be underestimating the possibility for worker disruption.
Meanwhile, when it comes to ESG investments, CEOs are “staying the course.” Despite the politicization of ESG over the last year, only 8% of CEOs are scaling back their programs.
However, 72% of CEOs are changing how they operate, with many exercising extra prudence when it comes to communication of ESG initiatives.
Leadership is also a major focus. CEOs and investors feel that the next generation of CEOs will need a combination of traditional leadership skills and data/tech acumen to succeed.
CEOs believe that salary will be the most difficult retention hurdle in the next 1-3 years, while investors place a combination of ESG and DE&I considerations at the top of the list.
The annual poll surveyed 260 public company CEOs and institutional investors representing over $3.4 trillion. The CEOs represent companies with a minimum annual revenue of $1 billion or more.
Investors include investment bankers, institutional and venture investors, asset managers and private equity firms and hedge funds. The research was conducted between October 12 and November 27.