The Australian M&A market has roared back to life this year, with current conditions paving the way for another busy year ahead, according to Corrs Chambers Westgarth's M&A 2022 Outlook report.
Despite ongoing COVID-19 disruptions, investor optimism coupled with low interest rates and significant amounts of deployable capital has bolstered deal activity in 2021.
Looking forward, the M&A 2022 Outlook predicts deal activity will remain elevated for the majority of 2022, with fierce competition and high premiums set to continue, and technology and infrastructure sectors to be in the limelight.
Corrs' detailed examination of the Australian M&A market draws on data taken from the firm's proprietary database of transactions, combined with in-depth research for the 12-month period ending 30 September 2021.
According to Corrs' Head of Corporate Sandy Mak: "2021 has been an outstanding year for Australian M&A, with a string of large-scale deals outpacing previous cycles. Amidst the deal frenzy, prices have skyrocketed to the highest average deal value in our M&A Outlook history.
"We expect heightened deal activity and boosted premiums to continue into 2022. This trajectory is likely to continue until there is an interest rate rise and until cashed-up financial sponsors allocate their spare capital, which will most likely be in the healthcare, technology and infrastructure sectors.
"We also anticipate the regulators, in particular FIRB, to remain highly active next year and for environmental, social and governance factors to increasingly influence deal dynamics as pressure from investors and regulators mounts," Ms Mak said.
Other key trends identified in the M&A 2022 Outlook include:
- Deal success rates are back to almost 80%, returning to pre-COVID levels
- Deal volumes are at the highest level since 2014, with average deal value at A$1.76b – the highest recorded in eleven editions of the Corrs M&A Outlook
- Strong competition for assets has seen takeover premia in the 50%+ range for the second year running
- Increased FIRB scrutiny has resulted in a resurgence of Australian bidders, who accounted for 62.75% of deals announced in 2021. This represents a significant shift from 2011, where just 39% of bidders were Australian.
To download a copy of M&A 2022 Outlook, please click here.
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