More mergers and acquisitions in store for 2019

Australia hit a record for mergers and acquisitions (M&A) not seen since 2015 last year, totalling $164.1 billion in deals, with energy, mining and utilities topping the target sectors.

Research by Pitcher Partners found that 67 per cent of survey respondents predict M&A will increase further in 2019.

The majority of deals will be done in the mid-market, which was also the market responsible for the majority of deals in 2018.

Transactions valued between $10 million $250 million accounted for 70 per cent of deals last year.

According to analysts at Pricewaterhouse Coopers, gold and copper miners in the mid-tier market will also have an ongoing presence in this year’s M&A activity.

Meanwhile, North American dealmakers will be the most active foreign buyers in Australia’s mid-market in 2019, Pitcher Partners noted in its fifth annual M&A report, Dealmakers: Mid-market M&A in Australia 2019.

Source: Pitcher Partners

 

“Australia’s economic stability combined with the level of private equity funds, both from domestic and international players, and strong corporate balance sheets has led to there being plenty of buyer activity to consider assets as they come to the market,” Michael Sonego, partner at Pitcher Partners, said.

“We are continuing to see strong interest from North America for Australian assets. This continues to be driven by Australia’s stability and lower pricing when compared to other global markets.”

Foreign inbound mid-market M&A accounted for 38 per cent of deals and 45 per cent of deal values in 2018. European interest in Australia has increased over the past year, and is expected to remain so throughout 2019.

Mid-market dealmakers will face greatest challenges from volatile equities markets (70 per cent of respondents), delays in government approvals for foreign investment (52 per cent) and valuations (45 per cent).

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