M&A growth sectors revealed

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The Asia-Pacific region enjoyed a 43.4% increase in M&A activity in 2014, and that upwards trajectory will continue in 2015, with a number of hotspots expected to boost workflows for Australian M&A lawyers.

Mike Barker, King & Wood Mallesons managing partner for M&A and tax, attributes the M&A growth to Australia’s strong economic positon and observed that fewer companies were erring on the side of caution in 2014 than they had been in previous years.

Improved economic conditions, pent up demand, a comeback in capital markets and the IPO market coming back all contributed to 2014’s positive M&A results, and a growing sense that the time is right for organisations that had been waiting to make a move.

“There was a definite sense last year that people were spending that little bit more money – whether its having another pizza each week, or buying a glass of champagne rather than a glass or chardonnay.”

A stronger stock market, coupled with the availability of equity financing saw boards looking at driving growth and acquisitions, rather than focussing on organic growth.

Mergermarket’s Global Trends report found that private equity activity was an area of considerable growth in 2014, with record buyouts and exits in terms of both value and volume of deals.  Barker expected that private equity M&A would continue to be a busy area this year. 

“I think the difference of private equity in 2014 to 2013 is a number of them have sold a lot in 2014 and they will shift more of their time to looking at buying new things in 2015,” he said.

However, Barker predicts that the infrastructure sector will be number one for M&A in the Asia Pacific region this year. In part, this will be driven by increasing government recognition of the need for infrastructure spending, and potential privatisation of businesses.

Sectors staying steady will be the property and health sectors, including aged care. Much of the ongoing work in the property space will be driven by Asian commercial property investors’ continued spending in Australia.

According to Barker, the outlook for technology and media is a little more uncertain and will depend upon potential changes to Australian media ownership laws. Meanwhile, M&A work in the manufacturing sector will continue to be a struggle.