Freehills M&A partner Tony Damian is confident in a busy year ahead despite new reports that leading corporates are not yet ready to engage in M&A. Only 31 percent of more than 400 companies surveyed by Ernst & Young said they expected to pursue an acquisition in the next 12 months — a 24 percent fall when compared to the October report.
The Global Capital Confidence Barometer survey found that confidence has fallen across the globe, despite fundamentals for M&A being stronger than they have been for some time. “After a turbulent period in the second half of 2011, the global economy shows some signs of stabilising,” stated the report. “The restructuring of Greek debt has provided some much-needed breathing space in the Eurozone.”
However, while confidence and stability are improving, the report found corporate are still fundamentally cautious, a sentiment echoed by Damian. “People want to get it right…that means the deals are tested a little bit more than they would have been - an extra board meeting or two, more strategy meetings. But I don’t see that as a bad thing,” he said. According to Damian, M&A in the Australian market, whether domestic, outbound or inbound is likely to increase in the coming six months. “I expect to see a lot of activity and quite a few announcements on the M&A front,” said Damian. “Reports of the death of M&A are greatly exaggerated.”
In particular, Damian expects to see more activity from the North American market, which has been overshadowed by Asian-based activity in recent years. “One area that we seem to be quite prepared to forget is North America,” he said. “North American investment is still significant and I think it will increase as that market recovers. The U.S. economy is improving, some may say slowly, but improving none the less and Australia remains on their radar.”
According to the report, sentiment from corporate indicates a shift from emerging markets investment to developed markets investment, which would favour Australia. “After three years in which corporations viewed emerging markets as the brightest hope for global growth, there are modest signs of a shift in sentiment,” stated the report.
Freehills was ranked as the top legal advisor for announced M&A deals in Australia during the first quarter of the year by the Thomson Reuters Legal Advisor Review.
M&A deals down almost 50% on 2011 11 April 2011
KWM scores twice in Xstrata & Glencore merger 2 April 2012