Companies in the Philippines have started pursuing mergers and acquisition (M&A) opportunities at the height of the pandemic, according to the findings of a survey conducted by accounting firm Ernst & Young (EY).
“The survey showed that the financial services, oil and gas, power and utilities sectors are among the most acquisitive sectors in the Philippines, but there is also growing interest in the technology and consumer goods sectors,” Noel P. Rabaja, SGV’s strategy and transactions leader, said.
He said, however, the companies may not totally divest their holdings, but will only sell some shares.
According to the 23rd edition of EY Global Capital Confidence Barometer, executives in Southeast Asia are emboldened to drive internal transformation, such as the roll out of digital initiatives and cost reduction and pursuing mergers and acquisition.
The survey of more than 2,400 executives in 52 countries, including 185 respondents in Indonesia, Malaysia, Philippines, Singapore, Thailand and Vietnam, found strong optimism among the surveyed business executives, as they expect a recovery in profitability to pre-pandemic levels by 2022 at 59 percent, or even 2021 at 12 percent.
“While respondents may feel that good progress has been made, they need to continue to sharpen their strategic focus, embrace the power of digital transformation, actively engage their customers and stakeholders and positively contribute to the communities in which they operate,” Vikram Chakravarty, EY global strategy leader and EY Asean strategy and transactions leader, said. Respondents said their main strategic considerations currently are to identify and invest in talent, divest underperforming assets or businesses and make strategic acquisitions. Key constraints to effective strategy implementation include a lack of leading technology, cost and capital constraints, and a lack of external advice.
A majority of respondents are currently undergoing a significant business and technology transformation program. Driving this are the impact of the pandemic, the current validity of purpose and strategic objectives and changing stakeholder expectations.