Insurance-focused law firm DLA Piper has published the latest edition of its M&A Intelligence Report, offering insights from over 5,500 private mergers and acquisitions (M&A) transactions.
The report covered current trends from the law firm’s database of M&A deals such as energy transition, artificial intelligence (AI), foreign investments, and sell side.
Shane Bilardi (pictured), head of corporate at DLA Piper Australia, said M&A transactions remain promising in the next 12 months, despite a decline in deal volume and value throughout 2023.
“While the report found deal volume and value declined over 2023 and the first half of 2024 was slower than the market anticipated, the upcoming 12 months offer reasons for optimism. The uncertainty caused by the convergence of electoral cycles in many major western democracies will be over, and interest rates and inflation seem to be falling globally,” he said.
He noted that deal terms have not shifted against sellers as might be expected in challenging markets.
“In this environment, our experience, and what we found in other markets, was that deals tended to take longer to execute, with due diligence extending and, in some cases, deal terms being revisited at the later stages of the transaction. Interestingly though, in a more challenging market for M&A, we haven’t seen deal terms move against the sellers in the way you would expect. Instead, the balance on deal terms between buyers and sellers has held relatively consistent, after moving in favour of sellers in the busier years that preceded 2022 and 2023,” he said.
DLA Piper’s report noted that Australia’s market is open, diverse, and well-aligned with global trends.
Technology, healthcare, and energy and resources are the leading sectors in private M&A activity in the country.
The country is at the forefront of the global energy transition, particularly in renewable energy investments, with a significant presence in critical minerals, wind, hydrogen, and solar industries.
“Australia sits at the forefront of the global energy transition and is among the most attractive markets for renewable energy investment,” said Perth-based Matthew Watkins, corporate partner at DLA Piper.
The report noted that Australia’s technology sector is highly innovative and commercially aligned with major trading partners, including the US, Singapore, and Japan.
“AI driven technology solutions have been rapidly adopted across all phases of the M&A lifecycle, from supporting M&A strategy decisions and enhancing due diligence processes and documentation production to the management and implementation of post-merger integration,” said Lyndon Masters, corporate partner at DLA Piper.
The report also highlighted that Australia’s foreign investment review regime, managed by the Foreign Investment Review Board (FIRB), is transparent and welcoming of foreign investment.
“US foreign investment into Australia is increasing and FIRB approval times are coming down, indicating that foreign investment that supports Australia’s strategic objectives will be prioritised and supported. We’re also seeing Warranty and Indemnity (W&I) insurance is becoming more prevalent in a private M&A context and appropriate time should be dedicated to this process as part of the overall transaction timetable,” said Brisbane-based Alexander Samson, corporate partner at DLA Piper.
Melbourne-based Joel Cox, corporate partner at DLA Piper, said many sell-side clients are hesitant to initiate formal sale processes due to market uncertainties, leading to more opportunistic deals.
“Our sell side clients are still often reluctant to launch formal sale processes, given various market uncertainty and so that means many of our completed deals are opportunistic. Exclusivity and access to due diligence is easier to obtain. We have seen some super quick processes, including a multi-billion dollar deal signed in under 6 weeks,” he said.
