Despite recent developments around the world, deals are still taking centre stage as companies look to M&A to find profitable growth against a backdrop of geopolitical uncertainty, slow economic conditions and digital disruption.
The 15th Global Capital Confidence Barometer finds Australasian corporate executives’ confidence around doing deals falling behind their global counterparts, but with volatility the “new norm”, the outlook for M&A is improving.
In contrast to the attitudes of global executives, and despite generally positive local economic conditions, the Barometer found local deal plans flat in the run up to the US election.
These Australasian results hinged on concerns about global volatility and geopolitical instability, and uncertainty of local equity valuations.
Smaller, smarter M&A deals in the pipeline
Despite the anxiety seen over the past few months, pre-US election the Barometer found local deal pipelines full of large numbers of smaller, smarter deals — and executive expectations for local M&A markets actually improving.
With the US election result now in, standing still is not a strategic option when everything is changing for executives, except the expectations of their investors and stakeholders around higher growth and returns.
In the medium to long term, there is every reason to believe that M&A will remain robust and sustainable. We may see some immediate indecision among dealmakers as the impact of the election result is understood. Certainly, any short-term equity volatility could cause a pullback in activity for a few weeks, similar to what we saw post Brexit. However, concerns over political instability are not derailing global M&A sentiment, in fact they are increasingly being seen as a means to combat it.
Local executives need to come to terms with the fact that M&A is an essential element in delivering profitable growth.
If Australasian executives and Boards do not successfully implement an acquisitive growth strategy as part of their capital agenda, global competitors will grow at their expense. It’s a period of global change and consolidation and unprecedented disruption — local companies must either grow or become irrelevant.
Transaction Advisory Services Leader
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