M&A Good Times Set to Roll in Australia, New Zealand
Good news for merger and acquisition advisors down under.
A survey of 121 senior executives in Australia and New Zealand by EY has found that 98% of respondents said the M&A market is stable or improving.
EY also found that 56% of those surveyed expect to pursue a merger or an acquisition in the next 12 months. Moreover, almost 60% of those Australian and N.Z. executives are planning for 3 or more deals, according to EY.
“There is greater confidence in the quality of transactions with 48% of those surveyed saying the quality of acquisitions is improving, up from 14% 12 months ago” said David Larocca, EY Oceania transaction advisory services leader, in a statement.
“This tells us there has been a significant improvement in the ‘meeting of minds’ between buyers and sellers which is also demonstrated by the 82% who think asset valuations will increase or stay the same over the next 12 months,” added Mr. Larocca.
EY’s survey also discovered that Australian and N.Z. senior executives are not particularly worried about volatile financial markets or politics.
“Local executives seem largely unconcerned with the policy uncertainty emerging in the U.S. or the Brexit shakeout,” said Mr. Larocca. “They are more concerned with responding to shareholder demands to deliver growth and harnessing digital disruption to acquire new capabilities. Deal-making is seen as key to succeeding on both of these fronts.”
A separate report by Mergermarket points to further M&A activity involving private equity firms in Australia because such firms have bought more companies than they have sold.
Between January 2014 and April 2017, private equity firms have done 164 leveraged buyout deals worth US$33.9 billion in Australia, but they have exited just 83 deals in US$16.5 billion worth of transactions, according to Mergermarket.
There were 16 private equity buyouts in the Australian energy, mining and utilities worth US$10.8 billion, according to Mergermarket, from January 2014 and April 2017.
During the same period, the most popular sector for private equity in Australia in terms of acquisition deal volume was business services where 30 deals worth US$2.7 billion were completed.
Private equity in Australia made 26 consumer buyouts worth US$1.3 billion between January 2014 and April 2017.
During the same period, private equity made 15 technology deals worth US$2.3 billion.
There were 22 pharmaceutical, medical and biotechnology takeovers by private equity by private equity in Australia worth US$560 million, according to Mergermarket.