Executives rank M&A last despite record activity
DRIVING organic growth, not mergers and acquisitions (M&A), should be a top priority for businesses according to a poll of senior executives released today, despite a record-smashing year of deals across the globe.
The survey carried out by Interim Partners found that over half (52 per cent) of executives thought that pursuing organic growth should be the key focus for businesses over the next 12 months.
That compared to just four per cent who put pursuing M&A first, even though this year’s deal frenzy suggests otherwise.
Overseas expansion was next on the list, with 13 per cent of the vote, followed by reducing debt, which was seen as top priority for nine per cent of the 700 interim managers or senior executives surveyed.
Interim’s managing partner, Steve Rutherford, said the research raised questions over whether businesses should be prioritising deals as a means of expansion: “M&A is one of the quickest tools for businesses to enter into new markets, achieve economies of scale and generate growth.
“However, even though the value of M&A activity is currently at its highest level since 2007, reaching $1.3 trillion (£850bn) in the first four months of the year, senior managers and executives do question if it should be such a high priority,” he said.
The firm added that although organic growth was seen as a key concern, lack of investment in parts of the business, such as research and development (R&D), IT and operations, made it hard for businesses to achieve growth this way.
More than a third (35 per cent) of respondents said that product and service development (including R&D) suffers the most from underinvestment. IT and business infrastructure came second (19 per cent), followed by operations (15 per cent).