External pressures include reactions to the continuing impact of technology and new competition. The relentless pace of technological advancement continues to reshape industries. As competitors harness the power of technology to streamline processes, reduce costs, and improve efficiency, companies that fail to implement these innovations risk falling behind.
A significant portion (31%) of companies planning to transform their business portfolio, backed by internal ambitions, are aware that their trading multiples have increased over the past year, down from 9.9x EV, and are more concerned about market conditions. and valuations. According to EY's analysis of Dealogic data, /EBITDA at the end of 2022 will be 8.9x.
Activist shareholder pressure for CEO consideration is also mounting again. Activist campaigns reached historic highs in his 2023 year, with the biggest contributors, Europe and Asia-Pacific, each launching record numbers of new campaigns. ¹ Activists will carefully consider plans for change and could build momentum to act even faster by 2024. CEOs should be encouraged more to articulate their plans and ambitions in ways that either retain the most ardent activists or make other stakeholders feel safe enough to support resistance. There will be a lot of pressure.
CEOs also leverage unique levers to drive business transformation, reallocate capital, and focus on core capabilities to improve financial performance. In this environment, there is no one answer or one-size-fits-all approach. Portfolio mix and structure and capital allocation decisions must be aligned with the overall transformation strategy.