November 2013

Time to move

9th Australasian Capital Confidence Barometer

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Capital confidence is growing in Australasia (Australia and New Zealand), reflecting global trends, and reinforced by greater stability in the local political arena. This is leading to a major shift in sentiment, with corporates turning their attention to growth for the first time in two years. This Barometer reveals plans for organic growth in existing products and markets and finds more than a third of companies expecting to make an acquisition in the next 12 months to meet their growth targets.

With relatively modest expectations for GDP growth, it’s hard to see where else the planned revenue growth will come from. Most organisations have wrung all the margin gains they can get out of cost efficiency programs. Deal-making is one of the few strategies with the power to deliver the new corporate growth agenda.

"With confidence returning, credit available and a renewed focus on growth, the M&A market is poised to re-open. First movers have everything to gain.”

Yet, despite having plenty of cash and access to capital, local businesses have been hesitant to do deals. That seems to be changing, and executives now anticipate greater competition for assets driving prices up with the valuation gap expected to widen.

It’s time for companies to stop thinking and start acting. There’s little upside to doing nothing. Those who seize first-mover advantage will win on both timing and price.

It’s time to move.

EY - Graeme Browning Graeme Browning

Oceania Managing Partner,
Transaction Advisory