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US Executives Plan Higher-Risk Organic Growth

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US Executives Plan Higher-Risk Organic Growth

Two-thirds of companies note significant improvement in US economic confidence.

Low growth and competitive disruption have prompted companies to pursue higher-risk approaches to growth than in the past, according to a recent report from professional services giant EY. Although only 29% of companies are planning to pursue an acquisition in the next twelve months, down from 41% six months ago, executives' broader confidence in the US economy and their strong deal pipelines suggest they are setting the stage for inorganic growth.

Findings from the study indicate an improving level of economic confidence. Two-thirds (66%) of executives believe the US economy is improving, up from 48% six months ago. Moreover, 29% of companies expect their deal pipelines to increase in the next 12 months, and 53% expect US deal volumes to improve. Most notably, 70% of executives cite increased confidence in corporate earnings, up from 38% six months ago and the highest level in five years.

"We are now finding that more companies are shifting their focus to raising capital and optimizing performance to prepare for future growth."

"Companies have weathered a prolonged period of uncertainty and their primary focus was on deleveraging, and cutting costs," said Richard Jeanneret, EY Americas Vice Chair, Transaction Advisory Services. "However, we are now finding that more companies are shifting their focus to raising capital and optimizing performance to prepare for future growth."

Raising Capital for Bold Moves

Forty-nine percent of companies are now focused on optimizing capital, suggesting that executives are cleaning house and getting ready to grow in a low-growth environment.

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