Transactions are best way to keep up with market changes, PwC says

More than half (56%) of firms in the UK view transactions – in the form of M&A, divestments, joint ventures or minority stakes – as the best way to keep up with the changing business landscape and secure their long-term viability, according to a new PwC report.

The firm’s report surveyed 300 UK senior executives with company revenues of $100m (£79m) upwards across six different industries on their plans to use transactions to drive transformation and create value. 

It found the stakes are high for many organisations as they seek to create value and keep up with the rapid advancements in technology such as GenAI while making progress on Net Zero ambitions. More than a third (35%) believe their business won’t be economically viable if they don’t make significant changes within the decade.

To keep up with their markets, 63% of senior leaders say they’ll be conducting coordinated, strategic change within the next three years. They’re aware that organic development is no longer sufficient and largely believe transactions must play an instrumental role in enabling transformation at pace.

PwC research finds that businesses whose transactions have exceeded their expectations are more likely to have adopted an approach with a clear vision – a transformative intentionality – behind their activity. 

Roberta Carter, UK value creation leader at PwC UK, said: “In a market where competitiveness relies on agility, businesses must make transactions an integral part of their transformation strategy. They need to adapt at speed, but organic growth often loses momentum when set against the demands of day to day business operations. 

“Deals that support the business’s ability to continuously adapt are more likely to succeed. By carrying out transactions and transformation simultaneously, leaders can establish a virtuous cycle whereby both activities unlock more value.”

The survey highlights three kinds of value businesses are primarily trying to create through transactions in the next three years. Stronger ESG performance is one, with almost three quarters (72%) saying they are likely to use transactions to help reduce emissions and meet their Net Zero commitments. 

The research suggests that technology transformation is also a key driver of transactions. Seven in 10 respondents say they are likely to use transactions to achieve their technology related goals for their businesses. 

Talent is the third lever. According to the survey, six in 10 (60%) say they are likely to use transactions to help them build a workforce with future-ready skills, while 44% acknowledge that deals enable companies to acquire capabilities and skills. 

While the sentiment towards transactions is largely positive, the scale of planned transactions vary. Almost a third (31%) say they expect to carry out a number of small-scale transactions. Just over a quarter (26%) say their approach will be a combination of larger and smaller transactions, and 15% say they would look to a number of larger scale deals. 

Carter concluded: “While many businesses will have their internal transformation plans, using transactions can help accelerate these, creating faster value delivery. This requires a holistic approach, using both organic and inorganic efforts aligned around a consistent strategy. 

“Failing to transform could have drastic consequences, but transaction boosted transformation can drive sector leading success.”