An Australian M&A H1 2018 update released by Pitcher Partners and Mergermarket shows the first six months of 2018 saw 564 mergers and acquisitions worth $58 billion in Australia, compared with 497 deals valued at $48 billion in the first half of calendar 2017.
This equates to increases of 13 per cent by deal volume and 19 per cent by deal value.
Mid-market deals, valued between $10 million and $250 million, accounted for 75 per cent of deals by volume, making it the most active tier in the market.
The biggest number of deals was in the Energy, mining and utilities sector, with 45 deals – or 26 per cent of the mid-market by volume.
Deals in the Technology, Media & Entertainment and Telecommunications (TMT) sector also increased, off a low base, as technology disruption and convergence drove digital transformation in the sector.
Activity also increased in the financial services sector and further transactions are anticipated as banks divest non-core businesses in the wake of allegations of industry misconduct being heard at the Banking Royal Commission.
Pitcher Partners Corporate Finance Partner Michael Sonego said the remainder of 2018 showed great promise for M&A activity given the country’s solid economic performance and political stability.
Foreign buyers, who accounted for 46 per cent of M&A activity by value in the first six months of 2018, would continue to contribute significantly to mid-market M&A.
“We are seeing a greater number of North American groups interested in Australia,” Mr Sonego said.
“In the US there are more than 2,500 private equity groups competing with corporates and family groups for deals, many of which are directing their focus to Australia, both because of the sheer competition they are facing domestically and because of Australia’s global reputation as a safe and stable place to do business.”
“I receive multiple enquiries per month from US parties looking to do business in Australia and they are prepared to buy at strong prices.”
Overseas buyers represented 35 per cent of M&A activity by deal volume during the period – a percentage that has remained relatively static but accounted for 46 per cent by deal value in the first half of 2018.
Access the full report here.