UK CEOs shift to proactive deal strategies amid growing confidence and disruption

• Latest EY CEO Outlook Pulse survey found UK CEOs are feeling more confident about economic growth prospects
• 68% of respondents said they felt positive about investment in new areas 
• Disruptive forces, including emerging technologies and geopolitical uncertainty, continue to shape CEO priorities 
• 98% said they will be actively pursuing a strategic transaction in the next 12 months

UK CEOs are feeling more confident about economic growth prospects over the next 12 months and are moving from a reactive to proactive deal strategy, according to the findings of the latest EY CEO Pulse Survey. 

The survey of 100 UK CEOs, which provides insights on capital allocation, investment and transformation strategies, found that over two-thirds of CEOs (67%) felt very or somewhat optimistic about the UK’s economic outlook for the next 12 months. 

When considering their own company, 73% of respondents said they feel very or somewhat confident about their company’s profitability over the next 12 months, whilst 68% said they felt positive about investment in new areas such as joint ventures or M&A. 

Navigating disruption

Just under half of respondents (45%), identified emerging technologies, including AI, as one of the top disruptors for their industry and markets over the next 12 months, whilst 38% identified the shifting global economic environment and geopolitical disruption. More than a third (36%) identified the elevated cost of capital, whilst just 23% said climate change and environmental issues were one of their top three ‘disruptive’ priorities. 

When it comes to responding quickly to the disruptions that are driving industry and market change, 34% of UK CEOs said they were highly responsive and ahead of the curve in addressing the disruptions, whilst 64% said they are moderately responsive but still need improvement in key areas. 

When asked about how they review their portfolio to respond to disruptive forces, UK CEOs recognised that conventional portfolio review processes need to change, and that traditional strategic planning and portfolio management are no longer effective. Over a third of respondents (35%) said portfolio reviews tend to be reactive rather than proactive, whilst 30% said they are not aggressive enough because of complacency about the future. When asked how often they assess their portfolio against their core strategy, over half (53%) said they do so on a quarterly basis, followed by 18% who said semi-annually, whilst just 15% review on a monthly basis. 

Silvia Rindone, UK&I Managing Partner for Strategy and Transactions, commented: “After a challenging few years, it’s encouraging to see a positive shift in sentiment among UK business leaders. This renewed confidence, reflected in our latest survey, will help drive UK CEOs to move from a reactive to proactive deal strategy and capitalise on disruptive forces at play. It’s critical that business leaders maintain an agile and forward-thinking approach to portfolio management to adapt to this new dynamic landscape and ensure they don’t get left behind.” 

Strategic transactions remain a priority 

Nearly all respondents (98%) said they expect to actively pursue transaction initiatives over the next 12 months, of these, 40% said they will be looking at M&A, 49% at joint ventures or strategic alliances with third parties and 31% at divestments, spin-offs or IPOs. Ninety-one per cent of respondents (91%) said they had paused or cancelled a transaction in the past 12 months, with most (32%) citing the cost of financing being too high. 

Silvia Rindone said: “The CEO survey results highlight a significant appetite for transactions among UK CEOs, however, while many are eager to engage in deals, the fact that 91% had to pause or cancel transactions due to high financing costs underscores the ongoing challenges of capital availability. This balancing act between opportunity and financial caution will likely shape corporate strategies in the year ahead.”