Corrs’ head of corporate Sandy Mak remarked: “In a world of low underlying economic growth, businesses are becoming increasingly creative in the ways they look to M&A to drive inorganic growth. We see private capital as a key driver of deal trends in 2020 and expect this to spur competition, creativity and complexity in deals.”

The firm reported the number of deals in 2019 was consistent with, and slightly greater than, what it reported in 2014. The average deal of $522 million was lower than 2018 but was reported as a slightly higher figure than 2017’s data.

The most popular transaction structure continued to be scheme of arrangements. This includes key benefits, like certainty of timing and outcome, which continues to be most attractive for acquirers. The resources sector was also reported as the most active in the industry sector for public M&A activity in Australia over the past 12 months.

Corrs’ found foreign bidders were active once again in Australian public M&A markets this year, representing 48.9 per cent of all bidders and 54.5 per cent of bidders for the deals with a value of $500 million or more. There was, however, a drop in the number of Chinese bidders, with only one bidder out of a total of 23 foreign bidders.

“This is a noticeable shift compared to the position five years ago where Chinese/Hong Kong bidders made up around 30 per cent of all foreign bidders,” the report said. “With the tumbling yuan, unrest in Hong Kong and continuing scrutiny of inbound investment by Chinese entities, we expect this trend to continue into the foreseeable future.”

Private equity firms were found to be back playing in public markets, with Corrs finding it will continue its increase in the level of private equity in public markets.

Corrs also found that in contrast to previous years, bidders are more willing to proceed with a takeover without a 90 per cent minimum acceptance condition.

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“This likely reflects the fact that schemes are continuing to become a more common structure where the desired outcome is 100 per cent ownership (particularly for deals with transaction values over $1 billion),” the report noted.

“Takeovers are therefore more likely to be used in circumstances where obtained 100 per cent ownership is not a priority and the bidder is happy to either accept there’s no minimum acceptance condition or a 50.1 per cent minimum condition.”

In the past 12 months, the market has also seen changes in policy and a step change in enforcement from all relevant regulators, who have adopted a more interventionist approach to transactions in a post-banking royal commission world.

“So, while we expect more competition, complexity and creativity in the way deals are executed, we also anticipate regulators will scrutinise more closely than ever the way in which those deals get done,” Ms Mak said.

“Key areas of focus include regulating access to data, with FIRB and ACCC identifying this as a priority, and ensuring there’s a level playing field for transactions by promoting competition and limiting the scope for unequal treatment and improper influence.”

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