5 charts on Australia’s mergers & acquisitions (M&A) market

01 August 2021 Consultancy.com.au 2 min. read
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National professional services firm Pitcher Partners has released its latest M&A market update in collaboration with Mergermarket, shedding light on the latest trends and developments in the mergers & acquisitions landscape. A roundup of the key findings in five charts. 

Despite a robust M&A market at the end of 2020, overall deals declined in the first half of 2021. While much of the drop stems from economic uncertainty, the research suggests that ambitious dealmakers who pressed on with M&A in 2020 have been replaced by a more cautious group of buyers. 

Australian M&A

However, deal value was up considerably, as buyers closed larger transactions and several record IPO’s were listed in the first six months of this year. 

The mid-market

The mid-market – those deals valued between AU$10 million and AU$250 million – saw around 150 deals close in the first half of 2021. James Beaumont, a Corporate Finance partner at Pitcher Partners said: “Values in the mid-market segment have surpassed those before the Covid-19 health crisis hit. Deal volumes are only slightly behind: down 5% from the first half of 2019, compared with 19% for the Australian M&A market as a whole.” 

Australian M&A: Mid-market trends

Within the mid-market, the technology, media and telecom segment is leading the way, accounting for 32% of volumes and 29% of values, “as dealmakers use tech deals to drive digital transformations to adapt to the challenges of the pandemic and an increasingly complex business environment,” said Warwick Face, a Corporate Finance partner at Pitcher Partners. 

Australian mid-market M&A: Sector volume and value

“The energy, mining and utilities space also saw abundant deals (20% of volume and 12% of value) as companies actively reassess strategies, selling assets to fund recovery efforts or exiting businesses that may not align with ESG frameworks,” Face added. 

Private equity

Total private equity deals in the first half of 2021 decreased by 39% in volume but increased 134% in value from the same period in 2019. Overall, private equity activity accounted for a nominal 6% of total Australian M&A.

In the mid-market, private equity activity in the first half of 2021 was 7% higher in value but 42% lower in volume compared to the same period in 2019. 

Australian mid-market M&A: Private equity deals

Inbound investments

Despite border closures and limited inbound travel, foreign dealmakers still participated in 29% of deals in the first half of 2021, and almost a quarter (23%) of deal dollars were from offshore buyers. Compared to the first half of 2021, inbound volumes in the past six months declined 37% although inbound values have increased 77%. 

Australian M&A: Domestic and inbound deal volumes

Outlook

Looking ahead, closed borders and political decisions to restrict travel until mid-2022 may be a major deterrent to greater inbound M&A through the rest of 2021 and into next year.

However, Australia’s fundamentals, robust IPO market and increasing consumer confidence means that across the landscape, “the second half of this year holds much promise for dealmaking.”