Australian M&A: A tale of two halves
Latest Indicators report shows that lowest performing sectors are feeding a surge at the top
According to our indicators, the volume of new M&A deals remained steady in FY18Q2, but below the level seen in the same period last year. New M&A deals commencing in June 2018 was up 3% compared to the prior quarter, but down compared to the same quarter in 2017.
This relatively low movement is due to a fairly even balance of those industries that are booming vs. those that are more subdued. This quarter, the IT, Real Estate and Industrial sectors saw considerable uplift, while deal numbers for the Consumer, Energy and Materials sectors dropped. But why?
In many instances, it’s a case of shifting and changing business models that pull demand from one area and drive it into another. The most highly publicized example of this at the moment is consumer retail, as demand shifts to online retailers and capital flows into warehouses and logistics, causing the Industrials sector to surge.
On the up
- Leading with the most activity was the IT industry, which was up 33% compared to the previous quarter.
- The Real Estate sector also saw an uplift in new deals commencing, with a 25% increase this quarter.
- The Industrials sector saw similar growth, with a 23% increase in new deals commencing.
On the flip side…
- Showing a more subdued outlook are Consumer staples, down 18% from last quarter.
- With a decrease of 30%, M&A deals in the Energy sector suggest a downturn, but this appears to be more of a delay rather than the full picture.
- Down 18% this quarter, the Materials sector has seen a steady wind down. We’re likely to see continued volatility in this area.
Despite the shifting landscape, all signs point to 2018 being a prosperous year for dealmakers overall. To find out more about what’s behind the numbers and what’s happening in the deal landscape right now, download the latest Indicators report here.