Disruption drivers for growth potential
A combination of more frequent disruptive events and powerful, longer-term structural changes in our economy have created impacts to businesses that have presented both opportunities and obstacles for growth and disruption, especially for private companies.
To understand more about these dynamics, KPMG surveyed over 600 leaders of US-based companies, including those that intend to remain private, those with plans to go public in the next few years, and a subset that have recently gone public, in order to ascertain key differences between private and recently-public perspectives. Below is a high-level overview of our findings from the respondents in terms of how they view their prospects around growth, disruption, AI, and areas ripe for reporting in an ever-changing environment. More detailed findings are available in the full report.
Respondents optimistic regarding short-term
growth prospects
86%
Respondents optimistic regarding mid-term
growth prospects
87%
Top 5 negative disruptors
Private and newly public companies are harnessing AI to disrupt their sector and drive growth. Private company risks, including cybersecurity, the ethical use and deployment of AI, and increasing energy costs, are directly connected to this AI focus, elevating the need for trust.
Scott Flynn
Vice Chair - Audit, KPMG US
Total
Emerging Giants
Companies need to be moderately disruptive to grow and capture market share, and most are – 72% of companies surveyed say they are ready to capitalize on major growth opportunities. 67% surveyed are also projecting an increase in their M&A deal activity over the next 18 months. Recent IPOs are much more likely to forecast an increase in their deal activity – potentially seeing it as way to fast-track further growth and expansion of their businesses and/or to acquire disruptive AI technology.
Over 70% ready to grow now; M&A deal activity and IPOs anticipated to increase
72%
67%
72% of respondents say they feel prepared to capitalize on major growth opportunities today.
67% of respondents say that the deal market will increase in the next 18 months.
Current preparedness to capitalize on major growth opportunities
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Nearly all respondents are optimistic regarding future growth potential
Deal market forecast in next 18 months
Private companies often have greater flexibility to innovate and pivot quickly with fewer constraints and public market expectations. While companies that have recently gone public may have an influx of capital that enables them to be disruptive, adjusting to new regulatory and reporting requirements and shareholder expectations are likely to be constraining some resources and tempering their risk taking and disruptive efforts. And given emerging giants are still in the growth phase, there may be constraints in resources and market influence. Read the report for full details.
Over half of respondents see themselves as strong disruptors or game changers
Self-reported company approach to disruption
Conservative
Disruptive
1%
Traditionalist
10%
Mild Disruptor
36%
Moderate Disruptor
36%
Strong Disruptor
17%
Game Changer
53%
Identify as strong disruptors or game changers
53%
Financial Services
53%
Tech, Media, & Telecom
55%
Healthcare & Life Sciences
52%
Industrial Manufacturing
47%
Consumer and Retail
60%
Energy, Nat. Resources & Chemicals
Slowdown in innovation and technological advances
45%
36%
56%
44%
Top 5 negatively impactful disruptors in next 18 months to 3 years
Companies are also concerned that growth could be negatively impacted by certain economic and market disruptors. Looking out 18 months to 3 years, cybersecurity and a slowdown in innovation and technology persist as top concerns, but recession and increasing energy costs also top out the list of issues that can stymie growth. Proudly Private companies express the most concern about these disruptors while Emerging Giants expect to encounter less resistance from these issues.
Keeping up with AI and other technological advances
43%
35%
50%
44%
Increasing energy costs
45%
33%
56%
44%
Cybersecurity threats
45%
37%
55%
43%
Difficulty acquiring and retaining talent
43%
37%
51%
41%
Traditional Private
Recent IPOs
Perspective on AI as a disruptor
53% of respondents say AI is a game changer for innovators and disruptors to allow early adopters the competitive advantage
53%
47% of respondents say AI is leveling the playing field so less innovative companies can catch up to better compete
47%
Companies are divided on whether AI is leveling the playing field (47%) or is a game changer that provides early adopting innovators and disruptors with a significant competitive advantage (53%). Where a company is on their journey along with capital, resources, compliance and disruption all play a part in their perspective.
Perception of AI as competitive disruptor is divided
Relevance and ranking of reporting and disclosure areas
As regulators have lately given more scrutiny to expanded reporting areas outside of financial statements, we asked respondents what they think the most relevant reporting areas are today. Cybersecurity risk is ranked as the most relevant, followed closely by ethical use of AI.
Cybersecurity risk and ethical use of AI are most relevant areas of reporting
38%
35%
23%
58%
Environmental sustainability
40%
38%
19%
57%
Governance
37%
38%
22%
60%
Diversity and inclusion
37%
39%
22%
61%
Ethical use of AI
32%
42%
24%
66%
Cybersecurity risk
Extremely Relevant
(7 rating)
Somewhat Relevant (4-5 Rating)
Relevant
(6 rating)
Not Relevant (1-3 Rating)
37%
38%
22%
60%
Human capital
Ranked Top 1-2
41% Cybersecurity Risk
28% Ethical Use of AI
33% Environmental sustainability
30% Governance
30% Human Capital
28% Diversity & Inclusion
Disruption Decoded: Perspectives on growth, AI and reporting from private and newly public companies
While there is strong optimism among respondents about growth potential, there are also concerns about the impact of economic and geopolitical barriers. Companies are divided on the role of AI as a game changer or a leveler of the playing field, and there are challenges that need to be addressed in order to realize its benefits. The bottom line is that companies need to be proactive in addressing the challenges and risks associated with disruption in order to capitalize on growth opportunities and could consider investing in risk management and compliance, addressing talent and skills gaps, and collaborating with industry experts to navigate disruption opportunities.
The bottom line
Regulatory requirements may vary for private companies compared to public, but it’s important to understand the expectations of stakeholders to build trust through reporting.
Scott Flynn
Vice Chair - Audit, KPMG US
Disruption status by industry: Percent identifying as strong disruptors or game changers
We follow traditional business models without significant changes or innovation.
10%
We occasionally adopt new technologies or practices but have not significantly changed market dynamics.
36%
We have introduced innovations that make us unique and could change industry practices and consumer expectations.
36%
We are a known leader in innovation and could significantly change the way the industry operates and consumer expectations.
17%
We completely redefine our sector.
1%
We follow traditional business models without significant changes or innovation.
10%
We occasionally adopt new technologies or practices but have not significantly changed market dynamics.
36%
We have introduced innovations that make us unique and could change industry practices and consumer expectations.
36%
We are a known leader in innovation and could significantly change the way the industry operates and consumer expectations.
17%
We completely redefine our sector.
