Strong quarter for M&A activity

It has been a strong quarter for M&A activity, particularly in the mid-market and we have seen a growth in activity driven by a combination of corporates with strong balance sheets, new private equity funds and a benign lending environment. With the Australian economy looking relatively healthy, business performance is generally positive and we expect activity levels to continue.

That said, there are some notes of caution. We have been working in several sectors where technical or regulatory disruption is changing established business models and have seen buyers be increasingly risk averse in these situations. There is also a growing belief amongst the financiers who we regularly work with, that the market is approaching a ‘high water’ mark. The opportunities the current market affords vendors may not last – our advice to potential vendors is to act quickly to become ‘deal ready’.

Deals & activity

The team have had a busy year working on a broad range of deals across a variety of industries. We have assisted our clients with buy and sell side due diligence, valuations and advisory services. A selection of completed transactions are shown below:

Vendor due diligence for Remedy and other assistance relating to a minority investment by Lion Dairy & Drinks.
Due diligence and assistance in relation to the investment by a leading private equity firm in a craft brewery.
Acquisition due diligence for a minority investment in a coffee roasting, wholesale and retail business.
Acquisition due diligence on investment in Star Car Wash Café.
Acquisition due diligence for a minority investment in WelleCo.
Acquisition due diligence on investment in Aquatic Achievers.

Market trends

The importance of getting ‘deal ready’

Our recent sell side engagements provided further evidence about the importance of preparing for a transaction. By working with our client’s financial advisers in getting the vendor “negotiation ready”, we reduced bidder advisory costs and streamlined the transaction process (keeping the process to an aggressive timeline).

Continued activity in the child care and aged care sectors

We have worked extensively on transactions in the child care and in-home care sectors over the last six months. Both industries are likely to experience further consolidation as industry regulatory changes materially impact the funding cycle of these businesses and may also impact profitability.

Team news

Our transactions team continues to grow and we have recently welcomed Courtney Barros, Scott Nicol and Belinda Cang to our Sydney office. Please contact a team member to discuss how we can help you.