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M&A activity in 2023 ‘remains in line with long-term averages’, yet faces headwinds
A BigLaw firm has revealed how M&A deal volumes are remaining in line with long-term averages; however, it has also noted the challenges ahead for such matters.
Jess Feyder
BigLaw firm Gilbert + Tobin (G+T) has released its 2023 Takeovers + Schemes Review — their annual analysis of recent Australian public mergers and acquisitions (M&As), which examines Australian M&A transactions in 2023 and gives perspectives on trends and drivers for activity in 2023.
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The report found that M&A activity is facing various headwinds, including rising inflation, growing banking sector liquidity concerns, expensive debt funding, global political conflict, supply chain challenges and the threat of a recession.
“The number and size of M&A deals have inevitably come down from the heights of 2021,” G+T said in a statement.
This finding falls in line with the dissipating deal volumes noted by BigLaw firm King Wood & Mallesons last month.
“Still, Australian M&A activity remains strong and in line with long-term averages,” G+T stated.
“2021 was a record-breaking year for public M&A. An anomaly,” it continued. “In this respect, it was inevitable that M&A activity in 2022 would come down from those all-time record heights.”
“While 2022 saw a fall in public M&A activity levels and deal values compared to 2021, by comparison to long-term averages, M&A activity in 2022 remained strong,” the firm stated.
“This is being underwritten by a pivot to the future in the drivers and funding of many deals.
“In particular, energy transition, climate change, electrification, future facing minerals and tech deals are now prominent drivers of M&A,” it said, a sentiment echoed by Sandy Mak, partner and head of corporate at Corrs Chambers Westgarth.
“At the same time, superannuation and pension funds are increasingly significant players and funding sources,” G+T highlighted.
The review also noted that M&A would be impacted by regulatory updates and priorities, for the Takeovers Panel, Foreign Investment Review Board (FIRB), Australian Securities and Investments Commission (ASIC), and Australian Competition and Consumer Commission (ACCC). These antitrust authorities seem to be stepping up their scrutiny of M&A.
BigLaw firm Norton Rose Fulbright has suggested that the year 2023 may be a tale of two halves, with low M&A activity seen in the first half of the year, yet that the second half of the year being characterised by a rise in dead volumes.
Partner and co-head of G+T’s M&A corporate group, Neil Pathak, commented: “We’re off the 2021 M&A numbers.”
“However, M+A activity in 2022 and into H1 2023 is still in line with long-term averages,” he noted.
“Importantly, various emerging drivers are underwriting current activity. These include energy transition, electrification, future facing minerals and tech deals and the increasing prominence of superannuation funding.”
“Despite the challenges of these times, we expect a relatively solid 2023 with opportunities available for those with funding.”
