As COVID-19 continues to sweep across the world, it is has undoubtedly taken the global financial markets by storm. Despite the unprecedented social and economic disruptions brought by the pandemic, Ernst & Young's Capital Confidence Barometer Survey (the Survey) of more than 2,900 C-suite executives globally shows that more than half (56%) of them continue to plan major transformation programs. At the same time, as the extent of COVID-19's impact on the global economy is gradually revealed, in addition to navigating the current downturn, companies are starting to look beyond the crisis and identify ways to better position their businesses for the new realities after COVID-19.

The Survey suggests that even though there is no consensus with respect to the exact path of recovery the economy will take post COVID-19, most of the executive respondents are positive about returning to the pre-pandemic economic level by 2021. More specifically, more than half of the executives surveyed expect a "U-shaped" economic recovery, which foresees a period of slower economic activity until 2021, while 38% of them expect a "V-shaped" recovery, which predicts a return to normal activity by the end of 2020. A small portion of the executives surveyed take a more pessimistic view with an "L-shaped" recovery model, meaning that economic activity may not pick up until 2022 at the earliest.

In preparation for a different market after the pandemic, companies are taking steps to redesign their businesses to help boost the recovery. Many global companies state in the Survey that they will conduct more frequent strategy and portfolio reviews and improve the quality of the actions taken resulting from such reviews. Such strategy can help companies identify areas of growth and vulnerability as soon as possible and highlight areas that companies should be preparing to divest or invest in if needed. This change will require better use of data to understand the rapidly changing market environment and find the companies' competitive edge. It will also involve rebalancing portfolios of assets more frequently through acquisitions and disposals.

Another move many executives surveyed (71%) expect to make once the crisis settles is to prioritize investments in digital and technology. At this time, 25% of the respondents in the Survey indicate that they are only using technology at a minimal level as part of their deal capabilities, even though M&A transactions nowadays more than ever require more capturing, processing, and analyzing of data. Looking beyond COVID-19, companies are considering reshaping their ecosystems and evaluating more innovative business models to adapt to the post-crisis future, where deal-making processes are expected to be conducted virtually at a faster pace.

While the COVID-19 pandemic has put the global economy on pause, this may also be the prime time for companies to reflect on and learn from the crisis. In addition, companies can evaluate and make strategic moves to build resilience in the businesses and to fuel faster growth in the economy upturn. See our previous publication for further discussion with respect to the potential risks in signed M&A transactions and how they are being dealt with.

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