CEOs Eye M&A For Supply Chain Resiliency
September 8, 2021
Many U.S. CEOs plan to undertake mergers and acquisitions (M&A)
over the next three years that will significantly impact their organizations,
while also transforming their businesses to gain digital and ESG advantages and
build cyber and supply chain resiliency, according to a new study released today
by KPMG LLP, the U.S. audit, tax, and advisory firm.
“CEOs are striking the delicate balance of driving a growth strategy inclusive
of M&A that is aligned with their ESG and digital strategies, while still
leading their organizations through uncertainty caused by the ongoing COVID-19
pandemic,” said Paul Knopp, KPMG U.S. Chair and CEO. “These intersecting risks
and opportunities provide CEOs the chance to uniquely lead and build trust with
their key stakeholders in an environment where nearly all expect to grow.”
The 2021 KPMG
CEO Outlook features insights from more than 1,300 CEOs at
large companies globally, including 400 in the United
States, on the key challenges and opportunities in
driving business growth over the next three years. Key
half (49%) of U.S. CEOs indicated they have a high M&A
appetite and will likely undertake acquisitions that
have a significant impact to their overall organization,
while 37% said they have a moderate M&A appetite and
will make acquisitions that have a moderate impact to
their overall organization.
Seventy-seven percent said they have an aggressive
digital investment strategy intended to secure
first-mover or fast-follower status.
- The top
five risks identified as posing the greatest threats to
growth included tax, supply chain, reputational, climate
and cyber security.
CEOs are confident in the growth prospects of the
domestic economy (83%) and their company (86%), but less
confident in the global economy (64%).
Seventy-seven percent said the proposed global minimum
tax regime is of significant concern to their
organization’s growth goals.
- Only 11%
said their organizations are very well-prepared for a
cyber attack. Overall, CEOs were split in terms of their
organizations’ ability to handle one.
65% said they have a plan to address a ransomware attack
if faced with one, 70% said an industry-wide approach is
necessary to properly address ransomware demands.
Fifty-nine percent said they will be ensuring their
supply chain is resilient in the event of a global
lockdown and travel restrictions, while 80% said
protecting their partner ecosystem and supply chain is
just as important as building their own organization's
Aggressive Digital Investment
Seventy-five percent said they need to be quicker to
shift investment to digital opportunities and divest
businesses that face digital obsolescence.
Seventy-nine percent said the accelerated pace of
digital transformation through the pandemic will not be
sustainable without first addressing burnout among their
Corporate Purpose and ESG
Sixty-one percent said the principal objective of their
organization is embedding purpose into everything they
do to create long-term value for all stakeholders.
Fifty-two percent said they are seeing significant
demand for increased reporting and transparency on ESG
issues today from stakeholders.
Seventy-four percent believe government stimulus is
needed to turbo charge climate investments being made by
the business community.
Seventy-eight percent said world leaders at COP26 must
inject the necessary urgency in the climate change
Seventy-four percent said their organization’s digital
and ESG strategic investments are inextricably linked.
Eighty-two percent said that the pandemic has caused
their focus to shift towards the social component of
their ESG program.
Seventy-six percent of CEOs are looking to lock in the
sustainability and climate change gains they have made
during the pandemic.
two times more CEOs (37%) said their companies’ ESG
programs improve financial performance than those that
said they reduce it (20%). Forty-four percent were
Future of Work
identified their employee value proposition as the top
operational priority to achieve their growth objectives.
asked about the impact they foresee the pandemic having
on their organization in the next three years, CEOs said
they will: be looking at shared office spaces to allow
employees to work more flexibly (59%); be looking to
hire talent that works predominately remotely (53%);
have a majority of employees working remotely at least 2
or more days a week (35%); or have downsized their
organization’s physical footprint (26%).
asked to identify key success factors to ensuring
employees are engaged, motivated and productive in a
world where hybrid work is increasingly common, the top
responses were: focusing on employees’ mental health and
well-being (42%); having a strong voice on the big
issues that matter such as climate change and racism
(38%); investing in digital training, development and
upskilling to ensure employees’ skills remain
future-focused (37%); and embedding diversity, equity
and inclusion so no individual or group feels
disadvantaged or disenfranchised (36%).