EY has released the 14th edition of the Media and Entertainment (M&E) Global Capital Confidence Barometer (the Report) which concludes that M&A activity will become an important piece to value creation strategies given the current subdued economic environment. The survey canvassed a panel of more than 1,700 executives in 45 countries of which 75 respondents represented the M&E industry.
Zero percent of the respondents expect strong growth in the economy, down 23% from six months ago. In this context, M&E companies are expected to proactively explore growth options by pursuing bolder and more novel strategies such as cross-sector moves and larger deal values.
Cross-sector deals are attractive sources of accessing new technologies and business models. The Report, however, cautioned that ineffective integration and post-transaction alignment of cross-sector businesses can result in failed synergies and ongoing cultural differences within the organization.
Thirty-two percent of respondents reported targeting deal sizes of more than USD $250 million, up more than 10% from six months ago. Relatedly, M&E executives are maintaining robust deal pipelines with 45% of respondents evaluating more than three deals and 76% evaluating at least two.
Corporate strategy is concentrated on developing competitive advantages through a focus on “relevant” markets – as opposed to the traditional binary approach of “developed” versus “emerging” markets. Seventy-eight percent of the respondents noted that they are looking to pursue cross-border acquisitions in the next twelve months. The top investment destinations for M&E companies are the United Kingdom, United States, France, Canada and China. Stability in the economy was cited in the Report as a primary factor drawing investment to Canada.
The digital realm continues to dominate the boardroom agenda as companies seek to leverage new technologies and data, while balancing risk of increased cyber security threats and attacks. Previous posts discuss the regulatory framework in Canada in respect of cyber risks and cyber security insurance as a tool for managing such risks.
Stay informed on M&A developments and subscribe to our blog today.