M&A activity reaches new highs

A total of 467 M&A deals worth $134.9 billion were announced in Australia last year – a 76.5 per cent increase in value from 2014.

Mega-deals (deals worth more than US$1 billion) dominated the M&A landscape, with 27 deals worth $105.08 billion announced, accounting for 77.9 per cent of annual value.

To put this in perspective, there were just 18 mega-deals totalling $45.31 billion recorded during 2014. As a result, average deal size in 2015 rose to $413.7 billion from $191.9 billion the year prior.

Mergermarket noted that the dominance of mega-deals seems to have affected mid-market activity which, contrary to the boom of total M&A value, decreased 23.2 per cent in value year-on-year to $12.8 billion, with 64 fewer deals.

“Accordingly, the share of mid-market value in total M&A dropped from 21.8 per cent to 9.5 per cent – below 10 per cent for the first time since 2002,” the group said in its latest trend report.

“In terms of mid-market transactions, business services led all sectors by deal value ($1.9 billion) and volume (37 deals), followed by financial services (22 deals, $1.5 billion).

Mergermarket said the depreciation of Australian dollar coupled with low interest rates have made Australian assets even more attractive.

“As a result, inbound deal value posted a year-on-year increase of 70.0 per cent compared to 2014, reaching a historical high of $64.9 billion with 183 deals,” the group said.

“Outbound M&A however seems unaffected by the devalued currency with 130 deals worth $29.4 billion, marking a 34.1 per cent increase compared to 2014 ($21.9 billion, 101 deals).”

[Related: Macquarie leads M&A activity for 2015]