The Deal in Focus: Heads of M&A Survey 2023
Welcome to the sixth edition of our annual survey of corporate heads of M&A, which features more than 130 responses from Australia and New Zealand.
The M&A outlook in Australia is proving resilient to the headwinds of global and local economic conditions. Activity won’t be at the boom levels of 2021, but most M&A leaders expect the number of deals they pursue to increase or remain stable over the next 12 months.
While there are clear challenges, most survey respondents are cautiously optimistic across each sector, with appetite for inorganic growth remaining steady. Respondents expect divestures to make a more regular appearance across deals in the next 12 months suggesting businesses are constantly reviewing their portfolios to ensure they are ‘match fit’ for whatever external market conditions might throw at them.
Economic Outlook
There’s been a large shift in the economic factors most affecting M&A in 2023. More than half of this year’s respondents selected interest rate movements as a factor affecting their ability to successfully execute deals, up from only 38% of respondents in 2022. Global growth has slowed significantly despite China reopening its borders, with the risk of a recession in the United States, United Kingdom and Europe remaining elevated. The economic outlook will depend on the outlook for interest rates. Central banks walk a narrow path in many advanced economies, attempting to raise interest rates enough to contain inflationary pressures without slowing the economy too much.
Power, Utilities and Renewables |
Mining and Metals |
Financial Services |
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The burning platform facing the Power, Utilities and Renewables (PUR) sector is now well understood in loungerooms and boardrooms alike, as escalating prices and unstable supplies drive governments to search for a leaner, greener solution. But have we left it too late to achieve an orderly transition of Australia’s energy sector? Time will tell, but it may well be our greatest enemy in solving one of our nation’s biggest challenges (and opportunities).
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Though just 40% of Energy, Resources and Industrials (ERI) respondents expect M&A activity to increase over the next year – a drop from 55% in 2022 – it’s likely a symptom of success. Mining and metals deals have been surging over the past six months, and M&A leaders seem divided on whether this hive of activity could get any busier.
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Financial Services Industry (FSI) respondents are somewhat more optimistic about economic conditions than the collective. But that optimism isn’t necessarily flowing through to the outlook for M&A activity. Only 22% of FSI respondents expect their organisation to pursue more deals in the next 12 months, compared to 45% survey wid e. In truth, the FSI market is in a state of flux relative to last year when early interest rate rises fuelled optimism among banks and insurers. As the big banks wind up most of the divestments prompted by the Royal Commission, the question remains: where will the next growth phase come from? |
Explore previous Heads of M&A surveys
