Herbert Smith Freehills’ M&A in 2019: Succeeding in a Climate of Disruption report warned dealmakers that they need to pay more attention than ever to the other possible constituencies in an M&A deal, and look beyond the traditional buyer and seller.
For the firm’s head of global M&A, Gavin Davies, there are “increasing notes of caution being sounded for the prospects of the global M&A market in 2019.”
Noting the situation in China, the threat of trade wars, and the continued uncertainty of Brexit, Mr Davies said there are “some indicators that the market may be more subdued than in 2018”.
Despite this, “there is also a positive narrative that includes technological disruption driving vigorous activity,” Mr Davies continued.
“Whichever is right, planning for the impact of politicians, regulators and shareholders on M&A ambitions, and protecting talent through the process, will be ever more important,” he outlined.
“Failing to prepare for the challenges means preparing to fail," Mr Davies warned.
The report considered a number of M&A trends, with particular emphasis given to five major disruptors that the firm expects to see more of in 2019.
Politicians with new foreign direct investment powers are increasingly turning towards protectionism, even where national security is not an obvious concern, the firm reported, while antitrust regulators have greater powers and confidence, and are willing to take bold and sometimes unpredictable decisions that can derail or delay transactions.
Also of note, was the forecast of shareholders being more willing than ever to assert their views, while not being afraid to interfere with an M&A process or agitate to create one.
The report flagged talent as an increasingly vital asset on an acquisition and, on technology-related acquisitions, the retention of individuals behind the technology can be key to a successful deal, while also revealing how interlopers are taking advantage of longer deal timetables to disrupt M&A transactions, either by making a competing offer for the target or by targeting the buyer itself.
The release of this report comes after the firm recently nabbed top spot in an Australasian M&A advisory league table, undertaking the most deals in the region, and boasting Australasia’s highest deal values.