@Risk

Pursuing deals in growth markets can be tremendously beneficial.  But, doing business in growth markets is inherently more risky, too.

What can your company do to take advantage of the benefits (low cost manufacturing, access to natural resources, market access for basic global products, buyers with access to core operations, etc.), while mitigating potential pitfalls?

For starters, you may want to read PwC’s new study, Getting on the Right Side of the Delta: A Deal-maker’s Guide to Growth Economies. After analyzing 200 deals (both publicly announced and private ones for which PwC was an advisor) and interviewing 20 leading dealmakers around the world, PwC found that:

• The majority of deal risks typically relate to one or more of three key elements: the asset itself, the seller, or the government.
• The most common barrier to deal completion is an inability to get comfortable with valuations. 40 percent of failed deals in PwC’s data set fell victim to valuation concerns.
• The most common problems that emerge after a deal closes concern partnering, causing 30 percent of problems post-deal.  Beyond partnering, the same issues that prevent deals from closing also frequently emerge post-deal (direct government interference, problems with financial information and non-compliant business practices).

Fortunately, PwC’s report also includes five key recommendations for dealmakers when pursuing deals in growth markets. PwC advises dealmakers to: (more…)

The global automotive industry is poised for continued growth in 2012, provided the European Union gets a handle on the debt crisis there.

In an announcement last week, PwC’s automotive analyst group, Autofacts, said that it expects 2012 global light vehicle assembly will exceed 79 million units, an increase of 6.8 percent from 2011’s total.

According to Autofacts, there are many factors contributing to the positive outlook. For instance:

• Local demand in the BRIC marketplace is on the rise. Monetary tightening and other policy shifts in Brazil, India and China caused slower growth in 2011. But, as PwC points out, inflationary fears in these markets are subsiding –prompting correspondingly looser monetary policy –and these markets could be poised for substantial growth once again. Russia is positioned for another year of strong local demand. Autofacts forecasts BRIC growth is likely to reach double digits (12 percent) in 2012 following only five percent growth in 2011. (more…)

New research from PwC reveals some disturbing details which suggest that most companies aren’t necessarily providing investors with a complete view of the strategic opportunities and threats to the business.

Even though there’s considerable uncertainty in global markets these days, PwC’s new study showed that less than half (45 percent) of the 350 largest listed UK companies clearly explain the potential impact of the risks they have identified or how they intend to buffer their effects.

What’s more:

• Only 16 percent of the FTSE 350 clearly based their reporting on their strategy throughout their accounts,
• Just 35 percent clearly align their key performance indicators with strategic priorities and
• Two-thirds are failing to clearly define their business models in their annual reports.

Although these statistics may seem concerning, the study also uncovered a bright side: In many ways, reporting has improved from last year. For instance, back then, a mere 18 percent of the companies studied were clear about the impact of their risks.

In other positive developments: (more…)

Recent global events (civil unrest, volcanoes, the Japanese earthquake, etc.) have focused new attention on the importance of supply chain resilience. Incidents like these underscore how globalization has connected companies, suppliers, consumers and the world around them in new ways.

How should manufacturers respond to this intricate interdependence?  Are there specific steps they must take to achieve excellence in today’s connected marketplace?

A new whitepaper from PricewaterhouseCoopers (PwC) deep dives into these questions and concludes that essentially, there are five key issues that play an important part in determining whether manufacturing companies will rise to the level of excellent, adequate or merely mediocre. Those five key issues are:

• Identifying and preventing supply chain risk
• Linking demand planning with the whole value chain
• Making customer and supplier collaboration real
• Addressing lifecycle opportunities and demonstrating sustainable value
• Attracting the people and skills needed for the future

In the report, PwC does a good job of breaking down the first bullet point, the task of identifying and preventing supply chain risk. Ultimately, the firm recommends that you mitigate supply chain risk by: (more…)

Even though the number of cases related to the financial crisis dropped, overall federal class action filing activity rose last year, reaching its second highest level in the last five years.

The 15th annual Securities Litigation Study, released earlier this month by PwC US, found that the total number of filings for 2010 (174) jumped by 12 percent from 2009 (155) –an increase PwC says is driven in part by the signing of the Dodd-Frank Act last July.

“The anticipated effects of Dodd-Frank, and particularly the whistleblower program, could lead to a reinvigorated volume of reported securities violations and associated class actions,” Grace Lamont, partner and US securities litigation and investigations practice leader for PwC, said.  “Other exogenous factors, such as the possibility of WikiLeaks targeting specific industries and the advances in global communication and networking access, may have far larger implications.”

The most commonly sued industry remains the financial industry. The health industry came in second, followed by the technology industry. Not surprisingly, the utilities industry, specifically oil and gas, experienced the highest percentage increase of filings for any one industry during 2010 due to an increased number of cases related to mergers and acquisitions (M&A) and the Gulf oil spill.

PwC’s 2010 study also found: (more…)