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More than half of local companies are planning acquisitions within the next 12 months, according to the latest report from Ernst & Young (EY).
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EY reveals ‘bullish’ M&A momentum
10 November 2015
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The biannual Australasia Capital Confidence Barometer revealed that 53 per cent of local companies have acquisitions in the pipeline over the next 12 months, increasing from 44 per cent six months earlier.
The report itself is based on a survey of more than 1,600 executives globally, including 144 in Australasia.
According to EY, deal pipelines locally and globally have “ballooned”, with 83 per cent of Australasian companies now having three or more deals in the pipeline.
These figures are a staggering contrast with those of six months prior, which showed just 25 per cent of local companies maintaining deal pipelines of three or more.
Julie Hood, EY Oceania transactions advisory leader, noted that the “bullish M&A appetite” is being driven by changing business models, a need to secure competitive advantage, and the continuing low-growth domestic economy.
“How and what companies are investing in today is increasingly crucial to future business growth and sustainability, with every sector and every company facing change. So the corporate strategy discussions that CEOs and Boards are having now are more complex than ever before,” said Ms Hood.
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According to the report, 29 per cent of local and 48 per cent of global companies are planning acquisitions outside of their own industry. Of the local companies planning cross-sector M&A, 57 per cent are driven by changes in customer behaviour, while 30 per cent are attempting to access new materials or production technologies to further their operatons.
“Technology and changing consumer preferences are disrupting business models and blurring sector boundaries,” Ms Hood stated.
“Executives are focusing on M&A to secure innovation, competitive advantage and market share for the foreseeable future."
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