William Buck has released its M&A and VC Report 2021, revealing that Mergers and Acquisitions increased in Australia in H12021 by 2.5 times the five-year average, with many of those being mega-deals with a value above $1bn.
This follows a less than impressive 2020 which saw a sharp decline in the number (11%) and the aggregate value (26%) of transactions year-on-year. Of the deals that occurred in 2020, smaller transactions under $5m took prominence, accounting for 52% of all transactions – 10% above the 41% average across the 2007 to 2020 period.
Mark Calvetti, Director, Corporate Advisory at William Buck said increased appetite for deal making, particularly of larger deals, is a trend that’s expected to continue into 2022, with a double dip recession unlikely despite a recent return to lockdowns.
“When the economy goes through a difficult period, initially, people look to make smaller bolt-on acquisition rather than risk larger acquisitions.
“The trends we saw in 2020 highlight risk-averse behaviour and follow those in consumer and business confidence. If the size of transactions continues to lift as consumer and business confidence have, we can expect mid-market and larger M&A to experience a strong uplift alongside economic recovery.
Information Technology and Healthcare are leading the resurgence of deal making activity in 2021, accounting for a large portion of transactions to date.
IT was the only sector that demonstrated an increase in the number of transactions (3.6%) during 2020 amidst COVID-19, reflective of the update in digitisation that occurred in response to the pandemic.
Mark said: “We expect IT to continue to boom given the rapid digital transformation that’s occurred in response to the pandemic and the tremendous increase in investment by VC’s in tech companies over the last three years as confidence in the sector and adoption rates have increased.”
Meanwhile, healthcare is forecast for an annualised 2% growth over the next five years. Mark said he expects this growth to transfer across into deal making and for healthcare to account for more and more of the total aggregate M&A transaction value each year in Australia.
Venture Capital
VC activity is also strong, thought wasn’t as heavily impacted by the pandemic. In fact, in Australia, VC investment totalled US$2.7bn in 2020, up 59% from 2019, when the total deal value was US$1.7bn. This is despite the number of deals dropping by 13%.
IT is again the top-performing sector, accounting for 25-50% of all VC deals in Australia over the last decade.
William Buck’s M&A and VC Report 2021 is based on extensive research into M&A activity over the last 14 years and VC activity from 2019-2021. The report evaluates findings to inform our expectations of future M&A and VC activity. We also consider the current IPO market.
For more information on past and current trends and future deal making predictions, read William Buck’s full report here.
About William Buck
William Buck is a leading accounting and advisory firm with a focus on the middle-market and over 100 Directors and 800 professional staff across Australia and New Zealand.
The firm, which recently celebrated its 125th anniversary year, has a strong Corporate Advisory team with demonstrated experience in helping companies identify new growth opportunities. Over the last five years, the team has managed over $2 billion worth of transactions across Australia.
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