Deal Markets Reloaded: The Re-Entry of Institutional Players

Having experienced sluggish markets in 2012 and 2013, the M&A community is now expecting a much healthier 2014.


5 March 2014

Deal Markets Reloaded - www.dealcloserblog.com

Having experienced sluggish markets in 2012 and 2013, the M&A community is now expecting a much healthier 2014. What will drive the market this year and who the major players are likely to be was the focus of some debate at Dealmakers APAC panels in both Sydney and Melbourne.  You can watch the full interview below.

Tim Miles, founder of Miles Advisory, says he expects transaction markets to come back in 2014, albeit slowly.

“As far as earnings volatility, it seems we’ve had a sugar hit from the new government. If that continues we should see continuing upturn in earnings. It won’t remove the perception of volatility. But at least forward earnings will be showing growth rather than decline,” he explained.

Miles expects this will bring private equity buyers back to the table and will reduce institutional buyers’ perception of risk when undertaking transactions.

According to him, as institutional buyers recognise the market is picking up and the risk associated with doing transactions is subsiding, they will be more likely to enter into a multi-party process. This is something institutional players and private equity firms have been reluctant to do over the past few years, often as a result of the high cost of entering into a competitive process without having surety of the outcome of a bid.

“Due diligence can cost you upward of $500,000 to $1 million. Companies haven’t been prepared to do due diligence without certainty of outcome. From my perspective, as companies become more confident, they will need to use their balance sheet to make acquisitions, and get back into the transaction market. That will shorten timelines and should mean deal volume pick up in 2014,” Miles says.