LEADERSHIP INSIGHTS

The pace is getting faster for CEOs and senior leaders. There is a relentless focus on cost and organisational efficiency, combined with a pressing need to look at where to innovate and create value. That can be tough given organic growth is frequently hard to come by and M&A remains difficult.
  

This was the main thrust of the discussion in the opening sessions of Criticaleye’s recent Growth Company Retreat, held in partnership with AlixPartners and Yonder Consulting. Talking about the current landscape for dealmaking, Mo Habbas, Partner & Managing Director in the Private Equity Services Practice for EMEA at AlixPartners, commented: "If you look at the M&A market that started off this year, in North America – a leading indicator for M&A across the globe and also Europe – deal value as a percentage of GDP is at a 30-year low at the moment. Yield volumes are also very low… So, while the appetite for M&A is high, the ability to do deals right now is challenging.”
 

The capacity of dealmakers to model growth has been negatively impacted by a perfect storm of economic volatility, and that’s now been compounded by trade wars and tariffs. Mo continued: “Valuations have been complicated by uncertainty on inflation, high interest rates and the cost of debt. Throughout 2024, everybody was talking about 2025 being the year where we would get deals going again as there were signals that interest rates were going to come down and things would be more under control. Generally, people were feeling a little bit more optimistic about growth.”
 

So far, that’s not exactly come to pass. If anything, the sense of uncertainty has only multiplied. According to Matthew Blagg, CEO of Criticaleye, it’s a time where chief executives must cut through the choppiness and demonstrate true leadership. He said: “The one real positive you can say is that CEOs can be a bit more direct in this environment and I think that's a really great thing. This links to pace as you’ve really got to be pushing on everything without getting sucked down into the operational demands of the business.
 

“So, you need strong leaders who can manage that dynamic, otherwise you’ll find your pace comes off. You might get over a short-term hurdle, but you’ll have problems over the longer term.”
 

Equally, companies can be too defensive and not seize upon the opportunities that are out there. He said: “The danger is that you end up too focused on cutting as opposed to looking at impact and that's where you see the differentiation in really good organisations and leadership teams. They're absolutely dialling up their investments but looking at the implications of that as well.”
 

Marnie Millard, Chair of Marks Electrical Group and a Board Mentor with Criticaleye, described the balancing act that’s required in Boardrooms. “The primary conversations are around the strategy and the pillars of growth. We then need to make sure that this is well understood by investors and shareholders.”

At the Board level, she said it’s important to make the time to examine the business from a strategic perspective and bring the conversation back to those pillars of growth. “While there is talk about challenges, you've also got to encourage the executive team to ensure that they continue to push forward,” she explained. 
 

Michelle Darracott, Non-executive Director of TPT Retirement Solutions and former Chief Strategy Officer at Smart Pension, told the audience:  "There's a real need to create a sense of pace. At the same time, because I have experience in the retirement sector, I can have a huge amount of empathy with the executive team and be supportive as I understand that change might take longer in some instances than you would expect."
 

Ultimately, it’s an environment where Boards must have honest debate. “One of the things we've been doing is to spend a lot of time on strategic alignment and where the focus of the business should be,” she added. 
 

At the beginning of the Retreat, attendees were asked to use one word to describe the performance of their company at present. The dominant response in the word cloud was ‘challenging’, followed by ‘robust’ and ‘volatile’. It was by no means all negative, but the responses reinforce the difficulties faced by management teams and Boards. All the signs are that things aren’t getting easier for many – not all – growth companies any time soon. 
 

It was certainly felt that companies need to work harder at customer engagement. Tamsin Todd, NED, Auction Technology Group, commented: “In both the consumer and B2B space, you have to really win that customer back every day. You're not just waiting for that contract renewal. You're always looking at how the customer is using the product, what their satisfaction is and what their end-to-end journey is about …

“‎It’s important to think about orchestration. The old functional structures we’ve often inherited are not fit for purpose.”
 

As Matthew put it: “Most Boards are allocating more time to strategy in what is a fluid, shifting environment, but the reality is that you must possess the ability to flex. And I don't think that's going to go away.”