|[November 26, 2012]
Euro Debt Crisis Drives Search for Eurozone Acquisitions and Accelerates Investments in Emerging Markets, Accenture Survey Finds
LONDON --(Business Wire)--
Half of eurozone-based companies are actively seeking acquisitions
within the eurozone in response to the currency and debt crisis,
according to new research by Accenture (News - Alert) (NYSE: ACN). The survey of 450
business leaders in countries in and outside the eurozone also reveals
that although 44 percent have accelerated their investments in emerging
markets as a result of the uncertainty, companies in the currency area
continue to invest in their eurozone operations.
The research, published in a report: Exploring
the Eurozone: take cover or take advantage, covered
France, Germany and Spain, as well as China, the UK and the United
States. Ninety-six percent of responding companies have revenues of at
least $1bn and more than half report revenues of at least $5bn.
A majority (55 percent) of worldwide respondents say they are delaying
investment in the eurozone and exactly half say their long term
investment plans are now more focused on emerging markets due to the
debt crisis. Nevertheless, confidence in the currency area remains as a
quarter of French and Spanish respondents (25 percent and 27 percent
respectively) and 64 percent of German companies say that the crisis has
made them accelerate their investment at home or elsewhere in the
percent of surveyed eurozone companies say they will begin to seek
acquisitions in the currency area immediately or have already started
doing so (58 percent of German, 57 percent of Spanish and 36 percent of
French respondents). This compares to 38 percent of companies outside
Likewise, eurozone companies are more likely to seek joint ventures
(JVs) in the currency area in response to the crisis. Forty-five percent
are actively seeking JVs compared to 34 percent of companies outside the
eurozone. German companies are most eager (56 percent) followed by
Spanish companies (48 percent).
"It is inevitable that slow growth and uncertainty in Europe will make
investment to emerging markets look attractive," said Mark
Spelman, managing director, Strategy,
Accenture. "But the eurozone remains a good long term bet and a
significant number of high performing companies see opportunities for
organic and inorganic growth. This is less a case of outside investors
snapping up distressed assets, and more about companies sharpening their
competitive edge and gaining market share on the back of their
confidence in the European economy."
Outside the eurozone, Chinese companies appear keener than those in the
US or the United Kingdom to take advantage of the crisis and increase
their investments in the currency area, according to the survey. 25
percent of Chinese respondents say they plan to accelerate their
investments in the eurozone due to the crisis, compared to three percent
of US and 11 percent of UK companies. Seventy-one percent of Chinese
respondents are seeking acquisitions in the eurozone or will shortly
begin to do so, compared to 20 percent of US and 30 percent of UK
Cutting back while investing in operational excellence
Although companies are making aggressive cut backs, there is also
evidence that some are using the situation to improve their operational
72 percent of executives in the global sample intend to implement
discretionary cost cuts in the eurozone immediately, or have already
started doing so. This rises to 83 percent of Spanish companies and 90
percent of Chinese companies.
48 percent of the global sample plan to implement staff cuts in the
eurozone immediately or have already started doing so, rising to 53
percent of companies based in the currency area. Forty-three percent
of executives are considering relocating some operations as a result
of the crisis. This includes ten percent who may move some operations
out of the eurozone all together. German and Chinese companies are
most likely to relocate some operations.
Only a third (32 percent) of respondents believe the eurozone crisis
presents no opportunities to gain competitive advantage. When asked
which areas of their business the currency crisis is encouraging them to
improve, 33 percent of the surveyed executives said they would to invest
more in outsourcing, 30 percent in flexible supply chains, 28 percent in
risk management capabilities and 25 percent in shared services.
"Our analysis of previous downturns is also relevant today: high
performers in the upturns are those who have invested in the downturns,"
said Spelman. "The eurozone crisis has resulted in a severe response
from companies and our data suggests that they will continue to reduce
costs over the longer term. But companies must balance measures to
minimize costs today with efforts to improve their longer term
operational excellence and competitive advantage."
Confidence in the financial partners
The study suggests that some companies may have some challenges in
financing intended operational investments or their more ambitious plans
for growth and acquisitions. Fifty-nine percent of companies think that
the capital position of Europe's banks is exposed or dangerously exposed
to the crisis. And even though 63 percent of eurozone respondents are
confident that their primary bank is sufficiently or well capitalized,
45 percent say their primary bank's ability to lend has been 'hampered,'
or 'hampered significantly.'
These figures may explain why almost half (48 percent) of eurozone
respondents say they plan to establish new banking relationships in the
eurozone. That average figure coincides with the proportion in Spain,
and while only 31 percent of French companies participating share this
view, the figure rises to 58 percent of German companies.
"Given the desire of many companies to seek growth and acquisition
opportunities within the eurozone, banks will need to demonstrate their
stability and capital strength in order to maintain client confidence,"
Spelman continued. "High performing companies will intensify their
demands from the banking sector as they look to take advantage of
opportunities created by uncertainty in the eurozone."
View the full report at www.accenture.com/eurozone
View the infographic at www.accenture.com/eurozoneinfographic
Accenture is a global management consulting,
services and outsourcing
company, with 257,000 people serving clients in more than 120 countries.
Combining unparalleled experience, comprehensive capabilities across all
industries and business functions, and extensive research on the world's
most successful companies, Accenture collaborates with clients to help
them become high-performance businesses and governments. The company
generated net revenues of US$27.9 billion for the fiscal year ended Aug.
31, 2012. Its home page is www.accenture.com.
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