Australia: M&A Predator or Prey?

The Australian economy is in a very strong position compared to most locales around the globe. The current environment is perfectly suited to local business adopting a predatory role in global business transactions by seizing opportunities, moving decisively and adapting to new trends in due diligence.


19 August 2013

Mergers-Acquisitions-Predator-Prey

The Australian economy is in a very strong position compared to most locales around the globe. The current environment is perfectly suited to local business adopting a predatory role in global business transactions by seizing opportunities, moving decisively and adapting to new trends in due diligence.

But increased interest in Australian assets could lead to local business becoming the hunted instead of the hunter if they wait too long or fail to adapt.

The recent Dealmakers ANZ event in Sydney hosted an intelligent and thought provoking panel discussion about the challenges and opportunities changing the shape of the M&A landscape.

Should earn-outs be restructured? Nick Humphrey, partner with law firm Sparke Helmore, thinks Australia should learn from how these are structured in the US and UK but his peer Mark Stanbridge of Ashurst is not so sure.

How should business adapt to longer due diligence cycles? Matt Porzio, Vice President of Strategy and Product Marketing, points out that while there are comparatively fewer bidders on deals, the amount of information reviewed under due diligence has increased by 40% year on year. Addressing this growing data challenge without losing momentum on deals has made the use of the right technology even more crucial. Peter Dunne of Herbert Smith Freehills agrees technology creates the opportunity for the buy-side to effectively flip control of the deal instead of waiting for the sell-side to set the parameters.

Why are ‘bear hugs’ becoming an increasingly popular and aggressive tool by predatory companies? Jonathan Algar, partner at law firm Clayton Utz, suggested that bear hugs have “taken the place of the hostile takeover,” by putting price pressure on target boards and forcing due diligence without a commitment to proceed to a takeover.

With the latest Deal Flow Indicator results indicating a return to strength in the market, M&A professionals will be poised to leap on emerging opportunities. Just don’t stand still too long in the tall grass.

Download “Predator or Prey: Australia’s changing role in global business transactions” to gain insight from our panelists and view video footage of the discussions.