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
Senior Government Lawyer
Category: Other | Location: Canberra ACT 2600
· FINANCE LEGAL AND GOVERNANCE GROUP | CANBERRA, ACT · EXECUTIVE LEVEL 1 (ONGOING)
View details
Sunnier days ahead for M&A?

Sunnier days ahead for M&A?

A senior partner of Ernst & Young (EY) has stated that confidence is steadily returning to the global markets, which, he believes, can only be good thing for M&A transactions in Australia.

A senior partner of Ernst & Young (EY) has stated that confidence is steadily returning to the global markets, which, he believes, can only be good thing for M&A transactions in Australia.

“It’s all about confidence,” said EY’s Oceania managing partner, transaction advisory services, Graeme Browning, when speaking to Lawyers Weekly about the latest EY Capital Confidence Barometer Report, which was released earlier today (23 April).

“In regard to M&A activity, we’re not exactly exuberant about the state of the market, but I guess you can say we’re cautiously optimistic”.

The report surveyed 1500 executives from companies in 57 countries, including 146 respondents from Australasia, and paints a positive picture of the improving global economic outlook.

Confidence and optimism has remained stable across a range of indicators including economic growth, employment, corporate earnings, credit availability and market stability. Australasian businesses are twice as optimistic about the global economy as they were in October when the last report of this kind was released.

The latest report showed that 30 per cent of those surveyed believe the global economy is improving – a sharp spike from just 16 per cent six months ago. A healthy 52 per cent said it is now stable, while only 18 per cent said they believe it is in decline, down from 53 per cent in October.

“Preservation is now the primary capital management focus for just 13 per cent of respondents, both in Australasia and globally, which is a positive trend,” said Browning.

“The slow but steady improvement in the United States economy continues. Confidence in the sustainability of China’s growth has returned, with growth moderating but remaining healthy and most observers expecting a ‘soft landing’.

“My own view of the M&A sector is that it is on the road to recovery. Obviously, confidence is key. Confidence is paramount. Once M&A people are confident about the market they will spend. I can foresee an increase in M&A activity in the next six to nine months.”

The report says that Australasia corporate confidence in the global outlook is steadily improving, with Australian companies boasting strong balance sheets and well-positioned for growth. However, despite the increasing optimism, companies are not yet accelerating acquisition plans and are more focused on organic growth.

An impressive 91 per cent of those surveyed believe that local economies are stable or improving, up on 70 per cent in October, with just nine per cent believing the local economies are declining, down from 31 per cent.

The brighter outlook extends to the jobs market too, with a quarter of companies surveyed expecting to hire or create jobs within the next 12 months.

“Perhaps people are remaining a bit cautious. I think Australian companies have seen positive signs before, so they’re inherently cautious. However, in six months’ time there could be a further shift of view which could well lead to more acquisitions,” said Browning.

Of those surveyed, 32 per cent said they are considering acquisitions in the next 12 months, down from 41 per cent in October.
The report also showed that cash remains king for Australian companies that are typically carrying a low gearing, with 73 per cent of respondents having debt-to-capital ratios of less than 25 per cent.
“This means these companies have the capacity to fund growth,” said Browning.
The report revealed that 85 per cent either expect this to remain constant in the next 12 months, or fall further, continuing a cautious trend in balance sheet leverage.

Browning feels that for many companies, it is really only a question of timing. For those with a well considered growth strategy, a strong balance sheet, and a belief in an improving global economic outlook, now might be the right time for a well considered and evaluated transaction.

“Early movers and strategic buyers may have a window to gain a competitive advantage. If confidence continues to grow, M&A activity will follow and pent-up demand for growth will likely see a rush for assets. The second half of 2012 could be a busy time for transactions,” said Browning.

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

Sunnier days ahead for M&A?
lawyersweekly logo
Promoted content
Recommended by Spike Native Network
more from lawyers weekly
Scales of Justice, Victorian County Court, retiring judges
Aug 21 2017
Replacements named for retired Vic judges
Two new judicial officers have been appointed in the Victorian County Court, following the retire...
Applauds
Aug 21 2017
LCA applauds proposed Modern Slavery Act
The Law Council of Australia has welcomed new recommendations for the development of a Modern Slaver...
Mentoring
Aug 21 2017
Top-tier offers targeted mentoring for Indigenous law students
Students at Macquarie University will be the first to benefit from a new Indigenous mentoring progra...
APPOINTMENTS
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'...
opinion
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...
Help
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 & ...