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Aussie companies are M&A targets – and with good reason
By Leon Gettler, Talking Business>>
DESPITE a post-Covid slowdown in mergers and acquisitions (M&A) activity, partly in response to global economic conditions and political uncertainty, M&A deals are now on the rise in Australia.
Nexia Australia’s corporate advisory partner, Brent Goldman said Australia had a tendency to “punch above its weight” in global markets.
“If you look at overseas companies coming here, the US always buys in Australia,” Mr Goldman told Talking Business.
“They’ve been a consistent purchaser of companies and a lot of times that’s in the software type services type industries. So there’s definitely an ongoing (interest in) businesses with skill sets, recognising the talent we do have in Australia,” he said. 
This ‘buy Australian’ activity also adds to the growth of the overseas businesses.
Why Australia is an M&A destination
But this, he said, was part of Australia’s strength and why it remains so attractive to offshore companies and private equity.
“We have limited resources in Australia so we’re always trying to find solutions to problems,” Mr Goldman said.
“And so we end up finding smaller companies with skill sets to solve problems that larger companies cannot do.
“That’s just the nature of our culture and also our education.”
Mr Goldman said some of the major M&As were going on in the construction and engineering space.
There was a reason for that.
“You can see that as being defensive,” he said. “That’s an industry that’s been struggling.”
The next biggest sector in M&As in Australia was in software services and, rather than the hot-button of the moment – artificial intelligence (AI) – it was actually more related to cyber security companies, Mr Goldman said.
The third biggest sector for Australian M&As was in the consumer discretionary area, notably around pubs.
US and UK companies know M&A value here
The consistent buyers of Australian businesses are US and UK companies.
Of these, 32 percent were US buyers and 17 percent were UK buyers. In other words, nearly half the M&As in Australia were from the US and UK.
Mr Goldman said many of the acquisitions were in software services or in media and entertainment.
“You can see the countries that thrive with the potential synergies there,” he said.
While many of the buyers were corporate, they were also often backed by private equity.
Looking ahead, he said the next few years would be a continuation of the current trend.
He said the transactions would take longer to finalise “as everyone tries to deal with the uncertainty in the background”.
However, entrepreneurs will want to “start moving forward again”.
“Once we get through these next six-to-12 months, and hopefully in the new year, we’ll see the activity pick up as we put a lot of the uncertainty behind us,” Mr Goldman said.
“Whether you like what will happen or not, at least you’ll know. You’ll be able to make decisions with some certainty or stronger views and then.”
Mr Goldman said while there were many different views about what lies ahead economically, politically and with business, that diversity of views will create transactions.
“It’s about the economy and people in jobs and creating that level of activity so that people will feel confident to start transacting again and building businesses and that create opportunities for all,” Mr Goldman said.
Hear the complete interview and catch up with other topical business news on Leon Gettler’s Talking Business podcast, released every Friday at www.acast.com/talkingbusiness
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