Transactions Newsletter

Notwithstanding the RBA’s view that Australia’s economy remains in good shape and is poised to achieve its 3% GDP growth target, a combination of an uncertain election outcome, cooling of the property market, Chinese economy and unfavourable global trade dynamics are all conspiring to impact business confidence. Typically these are the conditions we would expect to see dampen M&A activity, but equally they can be a call to action: uncertain times create opportunities and, for those who take a disciplined approach, can act as a catalyst for transactions. The strong deal flow we are experiencing indicates many are viewing the current market as an opportunity.

As 2019 ramps up we expect the Royal Commissions into Banking and Aged Care to drive considerable M&A activity in both sectors and we are well placed to support our clients in these areas. Contact our experts if you would like to discuss an acquisition or a divestment in these markets.

Recent deals & activity

Independent valuation for financial reporting purposes as required by HOYTS Group’s Chinese-listed parent.

Divestment of WWG’s portfolio of retail stores, including PMO support and sale advice across a number of transactions.

Acquisition due diligence and financial modelling for Remedy’s acquisition of The Forage Company.

Completion of five divestments of RCR businesses to: John Holland, UGL, NRW (ASX:NWH), The Energy Group Ltd (ASX:EGL) and Unique Metal Works.

Vendor due diligence and financial modelling for the successful exit of a local online wellness products retailer to a large international competitor.

Independent valuation for a premium FMCG brand considering strategic options.

Six themes we see for 2019

  • M&A driving market consolidation and reorganisation in Aged Care and Financial services, flowing from the Royal Commissions in both sectors
  • Continued M&A activity in the food and beverage sector as brands and manufacturers try to capture shelf (and ‘online shelf’) space
  • The continued growth of non-bank lenders offering growth funding, particularly in the mid-market
  • Thorough exit readiness planning giving vendors the best chance to maximise their exit value
  • Data analytics for due diligence moving from ‘nice to have’ to a core element of the due diligence process
  • Ongoing consolidation across the healthcare sector

Working Capital Report

The McGrathNicol annual Working Capital Report was released in late 2018 highlighting working capital investment increased for the second consecutive year, driven by increases in retail and transport and distribution sectors. Inventory levels were a major contributor. From an M&A perspective we also saw a significant increase in the use of Locked Box closing mechanisms. Contact our experts if you would like to know more.