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M&A activity to boom in 2015

The Australian market is primed for a strong year of M&A activity, according to a new report.

The report, released by Pitcher Partners and Mergermarket and entitled Dealmakers: Middle market M&A in Australia 2015, said the “stage is being set” for another year of “record” M&A activity.

“Confident and with ample cash reserves, corporate boardrooms and financial sponsors are ready to pull the trigger on a new round of deals,” the report said.

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“Bankers and investors also agree that low interest rates and government privatisations are creating excellent conditions for savvy business operators to pursue growth through M&A.

“This optimism follows a three-year trend of frenetic deal making, which experienced a jump from US$46 billion (AU$59 billion) in 2012 to almost US$70 billion (AU$90 billion) in 2014. M&A volumes have likewise bounced back post-financial crisis to reach 498 deals,” it said.

Pitcher Partners said this jump in deals boosted Australia’s position as the second largest M&A market in the Asia Pacific, sitting behind China in regards to volume and value.

The report also pointed out while a number of “bulge bracket” deals occurred during 2014, such as the sale of department store David Jones, Australia’s “M&A narrative” is very much defined by the middle market.

“These deals, defined as transactions valued between US$10 million (AU$12.8m) and US$250 million (AU$320 million), have historically accounted for a majority of M&A activity in Australia since 2009,” the report said.

“In 2014 alone, these transactions accounted for 68 per cent of all M&A, with the US$10 million to US$50 million (AU$64 million) range accounting for two in five transactions,” it added.

 

M&A activity to boom in 2015
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