Chairwoman, Teneo Holdings LLC
Expect to see a sizable uptick in M&A in 2024, says Teneo's Ursula Burns
Ursula Burns, Teneo chairwoman and former Xerox CEO, joins 'Squawk Box' to discuss the company's CEO survey on M&A outlook for 2024, top risks for the new year, outlook on AI, and more.
About Ursula Burns
In a June 2021 conversation at the Free Library of Philadelphia, Ursula Burns discussed her career and the structural barriers she observed in society. She stated that "we cannot be in a world that has such clear lines of demarcation of who is allowed to have access to this and who is not," describing these as "structural lines" that extend beyond individual perceptions. Burns also advised that if someone is "continuously undervalued and irrelevant" in a workplace, they should "find another place to work," adding that such an environment is "not worthy of your talent." Burns, the first Black woman CEO of a Fortune 500 company, reflected on the importance of mentorship in her own career, saying she "would have never made it" without help from figures such as Vernon Jordan and others at Xerox. She currently serves on the boards of Nestlé, Exxon Mobil, Uber, MIT, the Mayo Clinic, and the Ford Foundation.
Transcript (18 segments)
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Interviewer0:00
A two-year trust battle with regulators and Adobe and Sigma called off their $20 billion merger. Yet a new survey of CEOs and institutional investors conducted by Teneo finds a majority expects a sizable uptick in M&A. Joining us, Teneo CEO and Endeavor Group Holdings chair Ursula Burns. Good to see you, thanks for joining. This isn't just what some money manager thinks might happen; these are the people involved in doing this.
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Ursula Burns0:52
Exactly. The way we pose this survey, this is the second year we've done this. We're in the boardrooms, we have over 1600 clients, employees, offices all over the world, and we are very close to the CEOs. We don't just send them a survey; we speak to them about the strategies in their business. M&A is clearly an active conversation in boardrooms today. 68% of the CEOs we surveyed said M&A is high on their list, and therefore we expect to see a sizable uptick in M&A in 2024.
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Interviewer1:34
And we've seen past periods where M&A is offensive — companies wanting to get into AI or whatever's hot. But other times it seems defensive, forced. How do you separate the two?
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Ursula Burns1:59
I think we're seeing both sides here. M&A slowed significantly in 2023, and we're coming out of a time of low interest rates. R&D is precious, and companies use M&A for both reasons: one is to grow their business, the other is to shore up their technology base. We're seeing both. This isn't a stumble into it; it's significantly more strategic. Business leaders and boards are looking at ways to increase their talent base, R&D pipelines, and expand their business because prices will be better for them to do all three through this vehicle.
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Interviewer2:42
So, you've got this era of deglobalization, globalization. Once again, I bet you've got both, don't you?
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Ursula Burns2:53
80% of CEOs say they'll continue to invest in deglobalization—globalization, whatever word we want to use. 80% said they're focused on supply chain flexibility and resilience. So they are moving talent, supply lines, or partnerships more spread out along the world. The signal was very clear: question asked, question answered. Will you continue down this path? The answer is absolutely. Not a lot of changes; most CEOs said they're going to continue the path they started in 2023. This is good business assurance plans, but also a good way to access new markets, new technologies, new people. This is not a questionable signal at all.
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Interviewer3:47
I wonder how specific you get, though. Does India suddenly become more attractive than China? Does Vietnam and some of those? Does South America?
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Ursula Burns3:59
Oh, check, check.
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Interviewer4:00
The same time zone.
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Ursula Burns4:01
Check, check, check. All three.
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Interviewer4:04
Onshoring.
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Ursula Burns4:05
China remains an important trading partner, an important person for us to have relations with. You know all the statements there. India, Vietnam, the Global South. Absolutely, all three of those areas and more are becoming more operationally viable for the CEOs we surveyed.
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Interviewer4:26
We've seen, Ursula, I don't know if it's a retrenchment or a rethinking of ESG, DEI. I think you found they're going to stay the course, but listen more, talk less.
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Ursula Burns4:48
I think half of it, yes. 92% of CEOs said that despite the political environment, despite the noise, they think they have constituents that require this, that they get the best talent this way, engage more clients and employees, et cetera. So 92% said they'll stay the course. But they're going to be a bit more cautious and pay attention to the political environment on how they speak about it. Not misleading, but being very clear and mission aligned in their conversations and actions around ESG. I think it's actually very interesting; this was another strong signal that they've thought deeply about ESG. They are trying to stay away from the politics and be more business focused in their decisions. It's actually a refreshing sign.
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Interviewer5:50
But on that, I'm just reading from some of the findings: the word 'split' — U.S. CEOs actually split, half continuing or accelerating while over a third are not retrenching but re-evaluating. What does that even mean?
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Ursula Burns6:07
25% or so said they have to step back and look at everything from the program to how they communicate about it. The rethinking in some cases is increasing their activities; in other cases, it's modifying activities. The strong signal, though, is that most businesses believe this is core to their future and core to engaging as many constituents as possible. They have to be careful.
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Interviewer6:35
If you're in college, maybe you should switch from French Renaissance poetry to some technology skills. Would that be a good idea if you want to be a CEO? What do you think?
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Ursula Burns6:47
If you look at what U.S. business-based people talked about from a technology perspective: AI is way up, obviously. Not only in understanding and using it in your business, but also in how you hire, including at the highest levels, including at the board level. Do we have the right skills in place? People familiar with AI and technologies in general. It's going to be a challenge not only at the college and graduation level but at the senior levels as well. A 20% jump year over year in what business leaders are going to do, how they're going to invest, how important this is to them. AI is now mainstream.