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Short-term market volatility is clouding otherwise strengthening global fundamentals, especially in the US, and there will be acquisition opportunities for companies that are prepared and disciplined, says EY.
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EY tips M&A activity to surge in 2015
23 December 2014
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Graeme Browning, EY Oceania’s transaction advisory services leader, said a large number of significant infrastructure transactions, including government privatisations are expected to get underway next year, and this will inevitably encourage other transaction activity.
“It will draw global focus to Australia and this will have spin-off benefits for other sectors,” he said.
“Additionally, the pressure on companies to deliver earnings growth at a time of low GDP growth means many companies are now looking to mergers and acquisitions to get ahead of their competitors.”
Mr Browning expects M&A activity to pick up across most sectors in Australia in 2015. However, he warned for some parts of the economy this will be triggered by distress and this includes the resources and related services.
“Retail is a mixed bag, with some performing well and others more vulnerable. Christmas sale results will be key,” he said.
In addition, Mr Browning said new market entrants taking advantage of disruptive technologies will continue to challenge existing operators across a range of sectors.
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“Consolidation in the media sector is also likely as existing players confront changing consumer behaviour driven by technology innovation,” said Mr Browning.
In EY’s most recent Australasian Capital Confidence Barometer, released in October, Australia had risen from 21st to sixth most attractive investment market globally.
“This is likely in part a reflection of the government assets expected to come to market in the next year or two. However, it also reflects the perception of Australia as a springboard to Asian markets,” said Mr Browning.
“Australia is a stable market. We are seen as a safe place to invest with reasonable growth comparatively, but the spice is proximity to Asia.”
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