But despite optimism on domestic and global economy, they’re considering growth opportunities carefully
Overwhelming economic optimism isn’t enough to make Canadian executives stray from a cautious dealmaking approach in the year ahead, according to the 21st bi-annual EY Global Capital Confidence Barometer.
Among the Canadian executives who participated in the survey, there was universal agreement that the domestic economy will improve over the next 12 months; 99% held the same view with respect to the global economy. And despite media-reported conjectures of a recession, 81% do not anticipate an economic slowdown within the next year.
At the micro level, 88% said they expect revenue growth in 2020, while 91% said they expect net profits to increase. In line with this view, Canada has regained a spot among the top five investment destinations in the latest edition of the barometer, joining the US, the UK, Germany, and China.
“Canadian executives are optimistic but considering growth opportunities carefully,” said Doug Jenkinson, partner in EY Canada's Transaction Advisory Services practice, in a statement. “Geopolitical uncertainty and potential impacts — including trade disputes, climate change-related policies and regulatory uncertainty — are subduing deal intentions in the short-term.”
This year’s survey marked the first time that dealmaking appetite dropped below 45%, as only 35% of Canadian executives — largely those in the mining and metals sector — expressed plans to pursue M&A in the coming year. Among those with plans for M&A in the near term indicated a focus on future-proofing through technology and talent acquisition.
In line with a growing trend to end the shareholder-first model, Canada’s executives are also paying more attention to social purpose, which the report said should be considered along with financial, market, and customer considerations with respect to future deals.
“Embracing and demonstrating a stronger corporate purpose is becoming an increasingly important factor in dealmaking strategy,” Jenkinson said. “Ninety-percent of Canadian executives say they have social benefit measurement reporting in place or plan to within the next 12 months.”
Canadian industry leaders appear to be ahead of the average executive in terms of focusing on social purpose. Globally, 35% of executives said they already have metrics in place to measure social value, while 49% said they are planning to adopt some in the next 12 months.
