A subdued year for the Australian mid-market
The start of the year saw a steady flow of M&A activity through Q1 to Q2 of FY2023. However, the last two quarters of FY2023 saw a decline in deal volume, largely due to the high interest rate and inflationary environment, which cooled acquirer and debt financing appetites. This has contributed to a greater bid-ask spread between buyers and sellers, resulting in some transactions being put on hold until markets are deemed to be more favourable.
M&A Annual Report Summary
- 1,077 deals completed in FY2023, a decrease from 1,455 in FY2022
- The average transaction value decreased from $121.30 million in FY2022 to $92.97 million in FY2023
- Except for the utilities industry, the number of deals fell across all sectors
- The overall average multiple achieved for completed deals decreased from 13.9x in FY2022 to 10.3x in FY2023, which is in line with the average multiple for deals in FY2021 of 10.7x.
The outlook
It is expected that future M&A activity will place a strong focus on sustainability. The acquisition market, in particular, will pay close attention to the environmental, social, and governance (“ESG”) protocols of target businesses.
However, the year ahead is somewhat uncertain. Growing concerns over economic uncertainty, high inflation, the cost of debt, and global political tensions may suppress M&A activity in FY2024. Indeed, HLB Mann Judd’s 2023 IPO Watch Mid-Year Report suggested difficult fundraising conditions due to a shift in investor sentiment.
Nevertheless, there remains an abundance of cash held by private investors and others to deploy, indicating that investor appetite may remain strong for strategic acquisitions.
"Despite market uncertainty, we are still seeing sustained levels of deal appetite in the Australian market for high quality assets."
Corporate Advisory Partner, Sydney
Key findings
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About the M&A Annual Report
HLB Mann Judd Sydney’s annual M&A Report analyses deal volume, pricing and industry activity for the past financial year. The report particularly focuses on Australian deal activity in the small to medium-sized (SME) space. In addition to the analysis, the annual M&A Report shares insights from recent transactions that the firm has supported.
Data in the report is sourced from S&P Capital IQ and publicly available records.
About HLB Mann Judd Sydney
Mann Judd in Sydney was formed in 1970 and over the past five decades has grown to 31 partners and directors. Today the firm provides a comprehensive range of advisory and financial services to Corporate, Private or Family Business and Individual clients.
The Sydney firm is part of the HLB Mann Judd Australasian Association. HLB Mann Judd is an association of leading award-winning advisory and chartered firms. HLB Mann Judd has offices in most of the major business centres in Australia, New Zealand and Fiji. HLB Mann Judd is a member of HLB International, the global advisory and accounting network.