find the latest legal job
Corporate Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Highly-respected, innovative and entrepreneurial Not-for-Profit · Competency based Board
View details
Chief Counsel and Company Secretary
Category: Generalists - In House | Location: Newcastle, Maitland & Hunter NSW
· Dynamic, high growth organisation · ASX listed market leader
View details
In-house Projects Lawyer | Renewables / Solar | 2-5 Years PQE
Category: Generalists - In House | Location: All Australia
· Help design the future · NASDAQ Listed
View details
Insurance Lawyer (3-5 PAE)
Category: Insurance and Superannuation Law | Location: Brisbane CBD & Inner Suburbs Brisbane QLD
· Dynamic organisation ·
View details
Legal Counsel
Category: Corporate and Commercial Law | Location: North Sydney NSW 2060
· 18 month fixed term contract · 3-5 years PQE with TMT exposure
View details
Uncertainty will lead to M&A bear hugs: firm

Uncertainty will lead to M&A bear hugs: firm

A Clayton Utz report says uncertain market conditions this year will heavily influence bid strategies and the way M&A deals are structured.

A Clayton Utz report says uncertain market conditions this year will continue to heavily influence bid strategies and the way deals in mergers and acquisitions are structured.

Joint bids and bear hugs will feature prominently in Australian M&A this year, the new report, called The real Deal 2012, says.

The publication provides insight into public M&A deal structures, tactics adopted by targets and acquirers, and developments shaping the future of the Australian M&A market.

Officially launched last night in Sydney, The Real Deal 2012 is based on analysis by Clayton Utz's M&A team of all Australian public company deals during calendar year 2011 valued at over $50 million, with analysis of all elements of each deal from announcement until close.

Corporate and M&A partners Karen Evans-Cullen and Jonathan Algar, who were key contributors to the analysis, said the findings uncovered commercial and technical legal trends in the approach and structure of Australian M&A transactions.

Evans-Cullen said joint bids – which have not featured prominently in the past – became popular in 2011 and were used in some of the largest deals of the year.

"We expect this trend to continue as bidders seek certainty in an uncertain market, and pool their resources to secure strategic assets,” she said.

Algar said the number of bids that started with bear hug proposals was also high.

"2011 has shown that bear hug proposals have been a successful tactic for pressuring target boards to engage with a bidder who would not have otherwise been welcomed," he said.

"We expect bear hugs will continue to be used in place of the hostile takeover. It is also a tactic which will be used increasingly by private equity."

Evans-Cullen said that the survey revealed a very positive trend that challenged conventional views that it was much harder to get deals over the line in 2011.

"While it was difficult to get cautious boards to push the button on a deal, once they did they were rewarded with a high success rate: 86 per cent of the deals announced in 2011 were successful (excluding ongoing deals)."

Algar said the number of successful deals in 2011 belied the high level of conditionality most bidders insisted upon to contain transaction risks.

"Our analysis shows that target boards that did take the plunge in 2011 generally did so after negotiating objective conditions with appropriate thresholds before the bidder could walk away. So while many deals included a high number of conditions, these conditions were qualified by targets so as not to give bidders easy walk away rights," he said.

While 2011 saw a preference for cash deals, if the Australian equity market stabilises in 2012, Evans-Cullen and Algar predict an increasing number of strategic domestic mergers and scrip bids this year fuelled by Australian companies having to take steps to demonstrate opportunities for growth.

Clayton Utz national M&A practice head John Elliott said as well as revealing new insights into M&A trends and structures, The Real Deal 2012 gave Clayton Utz's M&A team ready access to a rich portfolio of market intelligence that would be invaluable in providing strategic M&A advice.


Like this story? Read more:

QLS condemns actions of disgraced lawyer as ‘stain on the profession’

NSW proposes big justice reforms to target risk of reoffending

The legal budget breakdown 2017

Uncertainty will lead to M&A bear hugs: firm
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
LCA president Fiona McLeod SC
Aug 17 2017
Where social fault lines meet the justice gap in Aus
After just returning from a tour of the Northern Territory, LCA president Fiona McLeod SC speaks wit...
Marriage equality flag
Aug 17 2017
ALHR backs High Court challenge to marriage equality postal vote
Australian Lawyers for Human Rights (ALHR) has voiced its support for a constitutional challenge to ...
Give advice
Aug 17 2017
A-G issues advice on judiciary’s public presence
Commonwealth Attorney-General George Brandis QC has offered his advice on the public presence of jud...
Allens managing partner Richard Spurio, image courtesy Allens' website
Jun 21 2017
Promo season at Allens
A group of lawyers at Allens have received promotions across its PNG and Australian offices. ...
May 11 2017
Partner exits for in-house role
A Victorian lawyer has left the partnership of a national firm to start a new gig with state governm...
Esteban Gomez
May 11 2017
National firm recruits ‘major asset’
A national law firm has announced it has appointed a new corporate partner who brings over 15 years'...
Nicole Rich
May 16 2017
Access to justice for young transgender Australians
Reform is looming for the process that young transgender Australians and their families must current...
Geoff Roberson
May 11 2017
The lighter side of the law: when law and comedy collide
On the face of it, there doesn’t seem to be much that is amusing about the law, writes Geoff Rober...
May 10 2017
Advocate’s immunity – without fear or without favour but not both
On 29 March 2017, the High Court handed down its decision in David Kendirjian v Eugene Lepore & ...