Recovery turns CEOs' thoughts to M&A

The stock market recovery has put a spring in the step of techMARK CEOs and turned their thoughts to joint ventures, new market ventures and mergers and acquisitions.

This is according to a survey of chief executives from companies that are members of the high-tech index by accountants PricewaterhouseCoopers and the London Stock Exchange.

"It's a marked change from last year's survey – then, most CEOs were simply focused on financial stability and survival," said PwC partner Stephen Mount.

While the majority see a coming period of consolidation - particularly in the software and services sector where all respondents saw M&A as very likely over the next three years - everyone saw themselves as the consolidators.

"Most TMT sectors appear ripe for consolidation but almost every CEO wants to buy and hardly any want to sell. It's an anomaly and I think that company remuneration committees are going to give some thought to providing incentives for CEOs and management to consider offers if they are made," said Mount.

Most of the respondents thought that shares a very viable way of financing M&A but there was still a solid 37 per cent who thought cash is just as viable.

And company focus has turned from revenue growth and survival to increasing profitability. The top operational and internal challenge for 89 per cent of CEOs is maximising the return on investment, followed by managing risk, dealing with increasing regulation, controlling costs and developing new products.

One of the most surprising findings is that CEOs are rediscovering their customers now that things have started to improve. Managing and retaining customers jumped as a major concern for CEOs from 48 per cent last year to 80 per cent this year.

Mount's pithy comment on this finding was simply: "Better late than never."

Staff turnover is running at low levels, under 10 per cent, and most companies do not expect to increase their hiring over the next year. They do expect to increase it over the next three years and the report warns of a return to a "more competitive recruitment and retention market".