Insights

OUR LATEST RESEARCH

Flooding

From energy costs to credit ratings: The multifaceted financial and business risks of climate change

RESEARCH PULSE

Climate change imposes significant economic risks, from escalating energy costs to reduced productivity and creditworthiness. Rising temperatures impact industries by decreasing labor efficiency, shrinking local demand, and lowering GDP growth, particularly in discretionary sectors. Credit ratings are impacted by climate change due to physical (operational disruption) and transition risks (regulatory shifts). Adaptive firms incorporate climate awareness into strategies, leveraging external partnerships to enhance expertise. Proactive management ensures resilience, enabling businesses to navigate evolving environmental, economic, and regulatory challenges effectively.

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CEO facing investor activism

Targeting Value, Anticipating Threat From Activist Investors 

The untapped value within companies is frequently targeted by activist investors seeking profit opportunities. Even firms with robust operating cash flows and positive return on assets (ROA) become the focus of hostile takeover bids, if they underperform relative to their competitors. A comprehensive review of corporate strategy is a key driver of value creation, enabling companies to position themselves effectively against their peers while mitigating external threats from opportunistic investors.

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Shadow Banking

Intangible investments, R&D, and management practices shaping the transatlantic productivity divergence

RESEARCH PULSE

Productivity growth in both the U.S. and Europe has fallen below long-term averages over the past decade, despite increased investments in technology. Between 1990 and 2000, productivity experienced a sharp rise driven by the widespread adoption of computers, a trend further supported by the growth of broadband and business software in the following years. While overall productivity has slowed, U.S. firms have been more successful in adopting advanced digital technologies, whereas European firms have struggled to keep pace, with inefficient management practices limiting their ability to fully capitalize on technological advancements.

Europe's lower R&D spending, coupled with structural factors and challenges in translating R&D into productivity, contributes to its widening productivity gap with the U.S. Family-owned businesses, prevalent in Europe, often display weaker innovation and management practices, further exacerbating this divergence. Strengthening collaboration with external partners represents a practical approach to mitigating these inefficiencies.

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Planting growth and resilience with ESG

Powering financial growth and resilience with strategic ESG excellence

RESEARCH PULSE

Effective Environmental, Social, and Governance (ESG) practices are crucial for enhancing company value, as they tend to align with strong financial performance. They not only drive value creation but also build resilience in crises through increased stakeholder trust. Owners play a critical role in advancing ESG performance by employing legitimate engagement strategies, such as providing insights on emerging issues and fostering shareholder collaboration. Transparency in ESG initiatives further enhances reputation and enables accurate assessments by rating agencies. However, interest in ESG initiatives among asset managers has declined since 2021, highlighting challenges in commitment. Inconsistencies among ESG rating providers further emphasize the need for standardization and ongoing dedication to ESG improvements.

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Shadow Banking

Private equity challenges and the surge of private credit: Capital opportunities for non-traditional risk profiles

RESEARCH PULSE

Private equity is facing challenges in exits and fundraising amidst economic uncertainty, while private credit has seen significant growth. Firms like Ares and Goldman Sachs have raised billions, driven by strong investor demand. Private credit offers diverse strategies, such as junior capital, growth financing, and rescue financing, making it a dominant asset class with capital opportunities for mid-sized and large companies with higher risk profiles.

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Adapting Strategies to Evolving Trade Policies and Global Value Chain Dynamics

RESEARCH PULSE

Trade policies significantly reshape global value chains, influencing firm strategies. Companies adapt through locational, market, and supplier switching while upgrading production processes to enhance value. Trade restrictions, such as U.S. tariffs on China, affect not only the targeted countries but also global supply chains, raising costs for dependent firms. Tariffs on low-value imports have become a prominent focus on international policy agendas, with governments increasingly targeting these products. Research shows that affected firms have increased R&D investments, often supported by government subsidies, to navigate these challenges.

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Top management discussing leadership development and CEO contingency planning

Planning Ahead Firm Strategy and Contingency Plan  

The role of CEOs is crucial in shaping organizational performance, highlighting the necessity of effective succession and contingency planning. With many firms appointing new CEOs annually, preparedness becomes essential. The contrast between insider and outsider leadership transitions, especially in family firms, underscores the advantages of external partnerships for resource acquisition and innovation. Integrating leadership transitions, proactive planning, and partnerships is vital for achieving long-term growth and resilience in a competitive landscape.

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Growth Opportunities Amid Uncertainty

RESEARCH PULSE

During crises, it is crucial to maintain a proactive approach by continuing to invest in growth opportunities, fostering new ventures, and maintaining sustainability initiatives. This leads to higher returns, improved survival rates for small and medium-sized enterprises (SMEs), and better financial performance in uncertain times.

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Insight Nuggets

Some of our recent bite-sized insight nuggets. See all of them here
Tranformational Innovation Spend
Innovation imperative: How businesses can learn from consumer behavior and R&D strategies to redefining market leadership

"Google had this seemingly insurmountable position in search, but the advent of AI has fundamentally shifted the landscape," notes Melissa Schilling. "AI is to search what e-commerce was to Walmart." Her observation serves as a reminder that even the most dominant players are vulnerable to disruption through innovation and new product launches.

Read more..

Euro Area Inflation
Price reductions across markets: retailers, luxury brands, and wine producers adjust to evolving consumer expectations

General prices of goods have risen steadily in recent years, driven by a combination of factors such as escalating input costs, particularly energy prices, and supply chain disruptions. In recent months, price reductions have emerged as a strategic focus across diverse market segments, from essential goods to luxury items and premium wine.

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M&A activity 2022-2024
How lower interest rates and political clarity are reviving M&A activity, is there an emerging acquisition wave?

The most significant factor driving M&A recovery is the easing of monetary policy. After a record-breaking surge in deal activity in 2021, M&A volumes declined sharply in 2022 as central banks raised interest rates to combat inflation. However, the environment for dealmaking is improving.

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Top Countries and Cities for FT300 growth champions
Major European cities are driving enterprise growth, with the digital sector leading as a key driver for future development

The FT's Europe’s Long-Term Growth Champions, highlights 300 companies that have maintained strong sales growth despite economic challenges. Germany and Italy feature more often to be expected given their size.

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Luxury slow down
Luxury market €20bn slowdown: U.S. and experiential segments drive hope for recovery in 2025

After experiencing robust growth in the previous decade, the luxury sector is now facing a slowdown with only a moderate recovery expected for 2025

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Activist investor campaign goals
Outdated strategies make even profitable companies vulnerable to activist investors

Activist investor Elliott Investment Management has amassed a $5 billion stake in Honeywell International and is calling on the company to break itself apart. Strategic and operational improvements are becoming a primary focus in activist campaigns.

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Tariff impact on EVs
Tariff wars are pushing companies to adapt rapidly to maintain competitiveness amid geopolitical tensions

Geopolitical tensions are projected to further disrupt global supply chains, with electric vehicles (EVs) exemplifying the challenges posed by escalating competition among the U.S., China, and the EU, particularly into 2025.

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Banca d'Italia Manufacturing
Bank of Italy's report: companies must prioritize growth opportunities

According to the Bank of Italy's latest report, a substantial 52% of manufacturing segments reported a year-on-year contraction.

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