When PwC released its latest PwC CEO Survey early this year, technology played a prominent part:
So yes, tech is very much top of mind for US business leaders, who increasingly see access to the latest technologies as crucial for positioning their organizations for the future. While acquisitions can provide that access, alliances and joint ventures (JVs) are another option that enables companies to test the waters with less risk, allowing them to better understand an emerging tech’s potential before deciding on more investment.
In the CEO Survey, 40% of US executives said their companies are planning a new alliance or JV in the next year to drive revenue growth. CEOs worldwide gave the same response, compared to 37% who said their companies are planning new M&A. This follows a 2018 PwC analysis that revealed that alliances and joint ventures globally have been on the rise in recent years.
The number of alliances and JVs in 2017 was nearly 30% higher than in 2016 and more than four times the volume in 2010. Tech deals was a big reason why, with not only tech firms striking strategic partnerships but also companies from many non-tech sectors looking outside their traditional arenas for innovation, similar to what we’ve seen in M&A.
As emerging technologies such as artificial intelligence, augmented and virtual reality, blockchain, and 3D printing continue to gain traction, companies across the industry spectrum are considering how to make manageable investments that further their understanding and allow experimentation without overextending their businesses. Whether they buy or partner – or both – the business demand for tech likely will drive many deals in 2019 and beyond.