Now is the time for sellers to showcase their value.
The events of the last 12 months have accelerated the need for sustainable investing - and there’s never been a better time to showcase your value to potential investors.
Buyer interest in sustainable investment opportunities is growing. Here’s why:
1. Sustainability transformation is the new digital transformation
Just as COVID-19 has expedited digital transformation and the acquisition of service providers within the Knowledge Economy, we’re now seeing the sustainability agenda do the same for businesses that can demonstrate broader environmental and societal value. Sellers that can display such attributes will be the opportunities that drive the highest valuations in the coming year.
2. Global political policy is facilitating the sustainable investment agenda
Trillions of dollars in investment will be required to accelerate green energy opportunities across the globe. As fossil fuels fall in popularity and ‘Green New Deals’ emerge in major economies, buyers are actively looking for the investment opportunities that will help shape tomorrow’s cleaner world.
3. Buyers know ESG investments can improve long-term financial returns while reducing risks
During 2020’s Q1 sell-off, ESG investments contracted to a lesser degree than the market as a whole (10.8% vs 19.6%). In an unstable world, strategic buyers need this kind of resilience. With ESG investments increasing by 50% from 2019 to 2020 according to the Investment Association, now’s the time to realize your business’s value.
4. The ESG wave is still rising rapidly
ESG investments are accelerating exponentially with research from J.P. Morgan estimating that global sustainable assets totalled around $45 trillion AUM by the end of 2020. Sellers with a clear value proposition will be best placed to reap the rewards.
5. Early adopters of 'stakeholder capitalism' will be winners
Measures of corporate success are changing and strategic investors now need to acquire innovative businesses who can both create mutual, long-term value for stakeholders and help them navigate short-term pressure from financial markets.
6. Today's innovators will unlock tomorrow's success
At the heart of any successful ESG investment program, sits innovation. As Green IT is popularised, businesses that can unlock value from advanced operating models and data architectures are the investment opportunities of choice for those strategic buyers looking to quickly innovate through acquisition.
7. Sustainable Cloud investments can cut carbon emissions
Analysis from Accenture suggests that migrating to public Cloud services can cut global carbon emissions by 59m tonnes per year - equivalent to 22 million cars being taken off the road. Services providers within the Knowledge Economy that can display their ability to unlock and hasten this ‘sustainable cloud first’ approach will likely attract greater interest and higher valuations.
M&A is evolving. If you don’t change with it you’ll get left behind. It’s critical that your firm can display clear growth potential and a value-adding proposition. But what does that look like?