Looming Debt Crunch and Turbulent Domestic Politics Have Global CEOs Nervous About 2024, While Investors Remain Bullish, Teneo Survey Finds

CEOs expect a recovery in M&A activity in 2024, in spite of concerns about tougher regulatory oversight and higher cost of capital, according to a new study by Teneo, the global CEO advisory firm.

The annual survey, which examines the views of 260 public company CEOs and institutional investors representing more than $3.4 trillion USD of company and portfolio value, also shows that CEOs are decidedly gloomier than investors about the global economy in the year ahead.

"CEOs and institutional investors continue to navigate an incredibly volatile and fast-changing operating environment around the world," said Paul Keary, CEO of Teneo. "Every business leader has reason for concern about the year ahead, yet there is a clear desire to stop simply reacting and to start seizing opportunities, as evidenced by strong predictions for a recovery in M&A in 2024.”

Ursula Burns, Chairwoman of Teneo, said: “Our Vision 2024 survey again shows divergence in the views of CEOs and institutional investors on a number of major business issues – from the macroeconomic outlook for 2024, to the ongoing impact of deglobalization, to the greatest AI-related risks. It also reveals the increasingly complex stakeholder environment in which CEOs must operate, particularly during an historic election year.”

Key survey findings include:

Macroeconomic Outlook: Global CEOs predict a surge in M&A in 2024

• 68% of both CEOs and investors expect a sizable M&A uptick in 2024 despite tougher regulatory oversight and higher cost of capital.
• Leading CEOs have a tepid outlook on the economic climate, with 53% expecting worsening conditions. Investors, on the other hand, are overwhelmingly bullish, as 94% expect conditions to improve over the first half of 2024.
• 81% of UK-based CEOs surveyed say the value of listing in the UK has declined in the past year, with one-third reporting they considered relisting outside of the UK.

Deglobalization: Four out of five CEOs continue to retool in the face of deglobalization challenges

• 80% of CEOs report ongoing adjustments to their businesses to prepare for the potential of deglobalization, with a particular focus on supply chain resiliency.
• Meanwhile, 20% of CEOs (more than double last year's rate) are not planning for additional preparations in 2024, indicating that a growing number of businesses have already adjusted to this new normal.
• Amidst persistent friction around geopolitics, supply chains and trade barriers, the strategic importance of China has increased in the minds of both CEOs and investors over the past year.

Innovation: AI crossroads – CEOs face pressure to develop powerful AI solutions while minimizing privacy, security and compliance risks

• AI tops the list of technology investment priorities for both CEOs and investors, with nearly 80% actively investing in AI (a 20-point jump from last year).
• As investors push for the development of higher quality AI tools at speed, CEOs grapple with security, legal and compliance risks.
• With one in four CEOs reporting that they do not currently have the right talent to enable their company’s adoption of AI, investors believe CEOs may be underestimating the potential disruption within companies’ workforces.

Disruption: Anticipated political shifts risk upending corporate strategy

• Domestic political disruption is cited as the top risk facing companies heading into 2024, with potential changes to monetary policy and government spending, data privacy rules and environmental regulation of chief concern.
• Specifically in the context of the U.S. presidential election, every U.S.-based CEO surveyed is making some type of change to business strategy in anticipation of the outcome.

ESG: Despite political headwinds, 92% of global CEOs surveyed are staying the course on ESG

• With the politicization of ESG increasing over the past year, only 8% of CEOs are ramping down ESG programs.
• However, 72% of CEOs are making some change in how they operate – with many exercising increased caution on external communication of ESG initiatives.
• U.S.-based CEOs surveyed are divided on DE&I initiatives, with half continuing or accelerating their programs, while over one-third re-evaluate.

Leadership: Current bosses place a premium on technology skills for the next generation of CEOs

• Corporate leadership today is heavily representative of the perspectives of the current generation. Perspectives representing past and future generations are scarce in today’s C-suite.
• CEOs and investors believe that – in order to succeed – the next generation of CEOs will need to possess a combination of traditional leadership traits and data/tech savviness.
• Over the next 1-3 years, CEOs believe that compensation will be the greatest retention challenge, while investors put a combination of ESG and DE&I factors at the top of the list.

Teneo’s Vision 2024 CEO and Investor Outlook Survey was conducted by the firm’s in-house data, insights and analytics team. The survey includes the views of more than 260 global CEOs and institutional investors representing more than $3.4 trillion USD of company and portfolio value. The CEOs surveyed represent a global distribution of publicly traded companies with a minimum annual revenue of $1 billion USD or greater. Investors surveyed include a global sampling of professional investors in investment banking, institutional investing, venture investing, asset management, private equity and hedge funds. Research was conducted between October 12 and November 27, 2023.

For more information and to download full survey results, visit teneo.com/Vision2024.