The law firm’s annual M&A review showed that while conditions looked to be improving in 2014, there were still uncertainties, particularly around inbound investment.
“We saw signs of life towards the end of the year as deal activity improved, with 70% of deals announced in the latter half of 2013,” Corrs partner Sandy Mak said.
“Looking forward to 2014, in theory the conditions are there for the return of a thriving M&A market.
“Australia is experiencing a reasonably strong equity market, cash interest rates are at a 50-year low, the Australian dollar is down 15% of the last 12 months and there is pent-up acquisition demand.”
The report showed the drop in activity last year was impacted by a slowdown in the resources sector, with political uncertainty and lower than expected growth from inbound Chinese M&A.
Mak said a boost to confidence was critical to seeing a rebound, with rising foreign investment a key catalyst.
“A much-needed boost in confidence is critical to this deal flow returning,” she said.
“In 2013, we saw a significant decrease in foreign investment in public deals.”
Corrs said takeovers outstripped schemes of arrangement as the structure of choice in 2013 but target board cooperation continued to play a critical role in deal outcomes.
“Our review shows, once again, that the number one factor that will influence the success of a deal is a positive target recommendation,” Corrs corporate M&A partner Jaclyn Riley-Smith said.
“In 2013 we saw much of the bidder/target collaboration from schemes imported into the takeover process.
“In addition, there was also fierce competition among rival bidders for a handful of attractive assets in consolidating industries – we see that price was not the only trump card for the winners in these contested deals – pre-bid stakes, the ability to drop conditions, timing and choice of deal structure were all key strategic factors.”
The Corrs report is not the only review this year to forecast a rise in M&A activity, with Ernst and Young also expecting a rise in mining deals.
