A further 41% of CEOs confirmed they were plotting a merger or acquisition in 2017 in their response to PwC’s twentieth annual CEO survey, which found confidence is rising but concerns over tightening profit margins remain.
The level of confidence within the sector is higher than last year despite there being little faith in the overall health of the economy with 92% of CEOs reporting they were ‘very confident or somewhat confident’ about their firm’s revenue growth this year, but only 29% anticipating the overall economy will improve.
This confidence in the fundamental health of their firms in spite of the expectation of low economic growth was reflected in the commitment of 64% of leaders to recruit more staff.
Behind M&A decisions have been the growing difficulty of using any budget to invest in growing an existing firm, the CEO of Henderson Asset Management Andrew Fornica said.
“I would say, over the last few years, it has become harder to be able to invest in the business for future growth, as some of the more mandatory requirements driven by regulatory change have eaten into any budget you would have in that,” he said, saying it was the “key driver” of the merger between Henderson and Janus at the end of 2016.
However, CEOs seem reluctant to act over what they list as one of the biggest concerns, with only a 10% committed to prioritising attention to their digital and technology capabilities despite 66% claiming the pace of technological change in the industry was a key worry.
Barry Benjamin, global asset and wealth management leader PwC, questioned why there had been so few collaborations with FinTech businesses so far, given the rapid pace of technological change.
“Technology is a disruptive force and I am amazed by how low the sector’s survey responses are around digital and cyber security. This industry is not thinking as agilely as it should. How do customers interact with these firms and how will they want to in the future?
“When we think of demographic changes with huge wealth transfer where people do not work the same way as their parents, do we even have the right model to address their needs? Some CEOs are looking into this but our survey shows too many of them are not. There’s a real risk of firms being swept aside.”
