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Record confidence in M&A as corporates pursue digital transformation

Global Capital Confidence
Barometer | Australasia |
17th edition

Record confidence in M&A as corporates pursue digital transformation

Our 17th Global Capital Confidence Barometer finds Australian and New Zealand executives significantly more bullish on M&A than their global counterparts.

In Australasia, despite an uptick in local concerns around geopolitical risk and domestic political uncertainty, 63% of respondents expect to pursue M&A in the next 12 months – considerably above trend. Local M&A plans have not been this robust since the Barometer’s launch in 2010, with one exception in mid-2014.

This record intention to pursue M&A is supported by extremely strong confidence in the performance of the global economy, record-high stock market valuations and the strength of the global and local M&A markets.

With organisations accepting volatility as the new normal, acquisitive ambitions are being driven by the desire to future proof organisations against technology-driven disruption. Alongside efforts to bolster their internal digital resources, local organisations are also looking to M&A to acquire innovation and talent.

We are seeing an increase in shareholder activism, with boards under pressure to achieve growth, leading to active portfolio management. Competition from private equity (PE) is also on the rise.

With record levels of dry powder, broadening funds base (credit, special situations and infrastructure) and an increased appetite for exposure to Australasia, PE is set to take a bigger role in the competition for assets.