The latest data from Mergermarker indicates the fall was substantially driven by a sharp decline in the value of M&A in the mining sector, which dropped to $9.53 billion from $29.71 billion, a fall of close to 70%.
The number of mining deals in the Asia Pacific region fell from 121 to 87 in the same period.
The oil and gas sector did not suffer as badly, with the value of M&A falling by 41% to $43.84 billion as the number of transactions fell from 86 to 56.
Ashurst's Asia Pacific head of oil and gas, Peter Vaughan, said that in Australia the total number of deals fell from 21 to 16, but that was outpaced by the total value which decreased from $14.61 billion to $7.56 billion in 2015-16.
“The magnitude of the fall in the oil price experienced since late 2014 caught most oil and gas companies off guard and it is only recently we have started to see M&A return in the Asia Pacific region. Much of the M&A focus has been on cost competitive jurisdictions, such as Papua New Guinea,” Vaughan said.
Ashurst released a report in May that predicted that executives from some of the world’s largest oil and gas companies expect M&A volume to rise by 50% this calendar year, compared with 2015.
The Asia Pacific region could potentially benefit from this expected uplift, with respondents also identifying the region as the most attractive destination for growth and new investment.
Vaughan added that while these findings support a rise in M&A activity from current levels, the uncertainty created by the United Kingdom's decision to leave the European Union and its impact on equity markets presented a potential risk.
“Despite the ASX200 Resources Index increasing by 12.24% in the past six months, it is overall still down 16.13% since this time last year. The performance across the resources space has been anything but uniform and we would expect M&A activity to be equally variable, but trending upwards in 2016-17,” Vaughan said.
Ashurst M&A partner Antonella Pacitti said the fall in mining transactions reflected the impact of the overall weakness in commodity prices.
“History shows us that companies tend to pursue growth through M&A at times when the financial performance of their business is strong and they have confidence in the outlook, and their ability to accurately assess value,” Pacitti said.
“For the most part, the focus of mining companies in the past 12 months has been on internal levers such as cost cutting and restructuring to combat the fall in revenue being experienced.
“So it should come as no surprise that we have experienced a fall in M&A during the past 12 months against a backdrop of soft commodity prices and uncertainty about the economic outlook, which seems set to continue.
"For so long as these conditions persist, we can expect to see a continued 'stop-start' effect on deal flow and completion.”
Vaughan said companies exposed to gold and battery-related metals such as lithium and graphite have been strong recent performers.
“Investors are willing to support growth strategies in these areas however high valuations can present challenges for buyers,” he said.
Ashurst suspects that iron ore and coal markets continue to face challenges, and opportunities from investments, and something similar is happening in the energy space.
“Oil and gas companies have successfully weathered the storm and we have seen recent examples where the stronger players in the sector are using this window of low valuations to consolidate and improve their growth pipeline,” Vaughan said.
