2017 was a year marked by political disruption, regulatory change and uncertainty among private and public companies, financial institutions and governments alike around the world.
To help put everything into perspective, we asked some of our Senior and Managing Directors to discuss the challenges and value creation opportunities that will impact A&M’s global clients in 2018. As a result, we uncovered four significant trends to watch in the year ahead.
1. Disruption Inside and Out
Companies across a broad range of industries will face further disruption – both internally and externally – in 2018. Internally, implications from the Tax Cuts and Jobs Act will prove to be burdensome on tax departments at companies of all sizes. Since the law provides major tax breaks to corporations, many will choose to use excess cash to purchase new equipment, address talent deficiencies, expand into new and strategic geographies as well as implement overdue systems and processes.
Businesses will also be heavily affected by external forces. Customers will continue to disrupt traditional industries such as consumer goods and retail. Since consumers will continue to demand expedience and convenience, many companies in this sector will be forced to tailor to buyer preferences such as online and mobile device ordering, as well as faster delivery times. In other industries, such as energy, agriculture and materials, companies will need to remain nimble to changes with commodity prices as well as import/export taxes.
2. Risk Mitigation
From “WannaCry” to “WikiLeaks,” the first six months of 2017 proved that no business or government entity is safe from cyber risk. Sophisticated and intelligently planned attacks by malicious actors are increasing across all industries, particularly healthcare and financial services. While risk tolerance varies depending on the company and the industry, reducing future uncertainty and financial volatility will certainly be top of mind in 2018.
Next year, businesses will be tasked with radically changing the way they protect their people and their assets in times of distress. As organizations continue to be exploited through technology, many will need to re-evaluate their cyber risk postures, programs and capabilities to meet emergent threats in 2018.
General Data Protection Regulation (GDPR) goes into affect in May of 2018, and it can’t come quickly enough. The new mandate will strengthen and unify data protection across Europe – giving consumers control of their data while simultaneously enforcing best practices among businesses.
3. Increased Cross-Border Activity
In North America, companies will likely be affected by the resolution of many North American Free Trade Agreement (NAFTA) issues which could prompt production of automobiles, agriculture and other goods to be moved to Mexico if new tariffs amount to less than the cost savings from producing there. Changes in tax legislation will also force companies to restructure their international affairs in an effort to minimize tax leakage.
Elsewhere in the world will likely see a similar story. One A&M leader has found a significant increase in cross-border activity with China, and in the U.K., while the Brexit process is expected to bring continued uncertainty to both the national and international trading environment.
4. Windows of Opportunity
Alongside a booming stock market, corporate growth will be the ultimate priority in the private market. With increased buying power among private equity and strategic acquirers, the industry has witnessed a competitive deal environment and less time to evaluate bids. Dry powder and low interest rates have prompted many investors to make acquisitions or merge in 2017, a trend that will likely continue through 2018 if the positive economic trends continue.
Other businesses will see 2018 as an opportune time to develop carve-out plans, prepare transition service agreements and execute a timely separation of any divested businesses and entities.
Thank you to the A&M leaders who participated in this campaign and provided their insights:
- Adam Benson, A&M Taxand
- Al Liguori, A&M Taxand
- Anthony Caporrino, A&M Transaction Advisory Group
- Brian Pedersen, A&M Taxand
- Chandu Chilakapati, A&M Valuation Services
- Chuck Moore, A&M North American Commercial Restructuring
- Craig Walling, A&M Financial Industry Advisory Services
- Davin Teo, A&M Disputes & Investigations
- Douglas Sayuk, A&M Taxand
- Drew Johnson, A&M Taxand
- Harish Kumar, A&M Financial Industry Advisory Services
- Jeremy Cusimano, A&M Disputes & Investigations
- Jimmy Suruki, A&M Transaction Advisory Group
- Karen Engstrom, A&M Disputes & Investigations
- Kent Willetts, A&M Transaction Advisory Group
- Larry Iwanski, A&M Disputes & Investigations
- Mark McMahon, A&M Valuation Services
- Matt Bryce, A&M Private Equity Performance Improvement
- Meredith Damm, A&M Valuation Services
- Mike Cole, A&M Transaction Advisory Group
- Nick Alvarez, A&M Private Equity Performance Improvement
- Pete Gougousis, A&M Transaction Advisory Group
- Pierre Boldt, A&M Private Equity Performance Improvement
- Rich Moore, A&M Financial Industry Advisory Services
- Richard Bibby, A&M Valuation Services
- Rino Nori, A&M Transaction Advisory Group
- Ryan Omohundro, A&M North American Commercial Restructuring
- Tasneem Azad, A&M Disputes & Investigations