Joseph Craig
Simon Haddy and Tony Damian, who are partners at Herbert Smith Freehills M&A, have highlighted a few trends that will take place in the M&A market next year.
According to the duo, mixed activity levels will be the first trend expected to hit the market.
“As we approach 2017, you will note that the world economy gets more challenged with interesting factors, including politics and various businesses around the globe. For example, events such as the rise of minority parties around the globe, the Italian referendum and not forgetting the Trump presidency, has yet to bring some changes in the coming year,” they said.
They added that the key driver to what the New Year will look like depends on the role that the above events will have on an interconnected and globalised world economy.
“Yes, we expect mixed mergers and acquisitions activity levels in Australia, given that the world is facing political uncertainty and mixed economic activity levels around the world,” said the partners.
They also went ahead to mention that there will be good but not outstanding vintage due to some major deals throughout the year.
In comparison to the previous years, Chinese bidders will reduce their activities in the coming year due to recent changes of a reformed scrutiny on outbound acquisitions by Chinese companies.
Foreign investment will face renewed changes in almost all great nations, including Australia, which remains an awesome and friendly destination for Chinese and foreign investment.
“However, we are very certain and we expect North America to dominate Australian mergers and acquisitions market in the New Year,” said the partners.
This year, the Australian public mergers and acquisitions market received 40 per cent of deal value from North American bidders.
Also, North American bidders were involved in many significant private mergers and acquisitions processes.
Therefore, this shows that in the coming year, there will be continued focus in the Australian M&A market from Canadian and United States companies.
A common ground for the incoming Congressional Republicans and the new administration is business deregulation in the US.
Hence, the US and Canadian companies will soon gain confidence to continue executing mergers and acquisitions deals due to favourable developments on that front.
“Basically, the highest mergers and acquisitions deals in 2017 will be dominated by the mining and infrastructure sectors,” explained Mr. Haddy and Mr. Damian.
They also explained that the property industry might see some increase in mergers and acquisitions activity while the high levels of interest in the renewable energy industry will continue to prosper.
“We believe that the Australian mergers and acquisitions market will experience more consortium bids in 2017,” said the partners.
According to Mr. Haddy and Mr. Damian, some changes in bid conditions will be recorded as another trend in mergers and acquisitions transactions.
We expect various bidders to use “bear hug approaches” in exerting pressure on target boards because 2017 might see targets challenging excessively hostile bid conditions.
