Corporate leaders globally are grappling with the ever-changing business landscape, driven by broader economic issues, politics, environmental changes, digitalisation and shifts in industry-specific nuances.
The current world is characterised by volatility, uncertainty, complexity and ambiguity. Each of these terms explains a different phenomenon with volatility referring to rapid changes in an industry or a specific economic aspect.
This could occasion changes to customer needs or preferences affecting demand for goods or services. Some businesses are disrupted by these changes if they are unable to adapt which ultimately leads to failures.
The survival of any business depends on its ability to solve an existing problem, meet a customer need or fill an existing gap that customers are willing to pay for.
Transactions hold the key to the success of many businesses across the world. This is more so given the volatile nature of today’s world that can eclipse and lead to the collapse of a business that has existed for decades.
It is commonplace to find transactions interpreted as a merger of businesses, an acquisition of an existing business or divesting from a certain business or line of business. It is, however, notable that the transaction landscape is wider and encompasses joint ventures which could be incorporated or otherwise, alliances, partnerships and collaborations.
Generally, there are three levels of growth and maturity of a business, namely; developing, established or leading. Business leaders must institute appropriate strategies at each level to transition to the next level.
Organisations at the developing stage can seek partnerships and alliances. These could include commercial partnerships, joint ventures, and collaborations, among others to drive their growth. This creates synergies which if well harnessed presents a viable route for expansion.
Transactions are driven by among other factors an understanding of changes in market trends, business ecosystem and competitive landscape.
Overall economic changes may also provide opportunities for industry consolidation and sector convergence.
Business leaders should actively seek and pursue transaction opportunities that drive inorganic growth and provide a buffer for businesses to withstand internal and external shocks that can lead to their collapse, loss of market share and overall performance.
The writer is an Associate Director at Ernst & Young LLP. The views expressed here are not necessarily those of EY.
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