57% Of Auto Companies Expect M&A Outside Their Own Sector Driven By 'Innovative Disruption And Changing Customer Preferences'

After adapting to the low-growth global economic environment, and in spite of the concerns over short-term market volatility, automotive executives surveyed by EY expressed “continued optimism about deal making in the current macroeconomic environment.”

The poll indicated that deal fundamentals remain positive, as the probability of deals being closed and the quality of opportunities increase strongly and consistently. While experts anticipate most of the investments will be made in the lower middle market, they noted that “larger deals – those in excess of $250 million USD – now make up nearly a quarter of planned M&A.”

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Acquisitions Beyond Sector

Fifty-seven (57) percent of automotive companies declared to be now “looking at acquisitions beyond their traditional industry boundaries, fueled by innovative disruption and changing customer preferences. Cross-sector as well as cross-border deals will play a significant role in the M&A story,” the report explicated.

Moreover, they pointed out that most of the potential acquirers are exploring opportunities beyond their own national borders – with the eurozone as a focus point.

M&A Strategies And Buyer Competition

The latest Barometer “finds buyer competition, as more companies have returned to dealmaking, becoming a greater challenge to M&A strategy. Adverse political or economic conditions are also proving troublesome, which reflects the earlier findings that geopolitical issues are an increasing concern,” the experts continued.

Overall, EY sees a “rational and sustained automotive M&A market with growth opportunities continuing to surface, despite moderating economic levels.”

Executives seem confident about the fact that M&A continues to be an essential way of generating long-term value and establishing the basis for future growth.

Some Figures For Statistics Lovers

Source: EY Automotive Capital Confidence Barometer

Disclosure: Javier Hasse holds no positions in any of the securities mentioned above.