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Australian M&A and PE achieved record deal values in 2022, amid crushing volatility
22 March 2023 | Minutes to read: 2

Australian M&A and PE achieved record deal values in 2022, amid crushing volatility

By William Buck

Despite geopolitical tensions mostly crushing dealmaking in Australia last year, an abundance of dry powder saw record aggregate deal values achieved in both the M&A and private equity markets – according to William Buck’s annual Dealmaking Insights Report 2023.

While M&A activity slowed from a frenzied 2021, it was still above pre-pandemic levels – particularly in the first half of the year in which 87% of the aggregate value of transactions occurred.

Aggregate value increased 59% year-on-year to $191.9bn, despite volume decreasing 29%. This was the largest value recorded since 2007 and the lowest number of transactions, at 1210, recorded over the ten-year span of our research.

Mark Calvetti, Head of Corporate Finance at William Buck said he expects the value of M&A transactions in Australia this year to decrease from the record levels achieved in previous years.

“As the cost of debt rises, the number of ‘mega deals’ with a value of $250m+ should decline, leading to a reduction in aggregate value.

“However, those in the SME space of up to $50m should remain steady and could even see a hike in volume,” said Mark.

While it didn’t have a huge impact on the M&A or private equity (PE) sectors, elevated volatility in 2022 suppressed activity in the share and IPO markets, with only 79 IPOs completed and aggregate value dropping a dizzying 91% from 2021 levels to $1bn. Weakened stock markets and the underwhelming performance of many 2021 listings also deterred investors.

Following this lacklustre performance, Mark expects prospective IPO companies to wait for funding and list in the second half of 2023.

“As a consequence of the frozen IPO activity experienced in 2022, there are many prospective companies waiting to enter the market and access funding.

“If conditions improve in the second half of 2023, IPO activity is anticipated to experience a positive swing.”

Conversely, he expects the private equity market, which saw several ‘mega deals’ above $250m last year, to remain comparatively resilient as PE firms continue to target distressed assets.

You can access our complete Dealmaking Insights Report here.

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