M&A activity to slow in 2009
Financial services was one of the few sectors that recorded positive merger and acquisition (M&A) activity in the past 12 months, according to research by consulting firm KPMG.
A KPMG survey found overall M&A deal volume in the sector was bolstered by such large deals as Commonwealth Bank’s purchase of BankWest ($2 billion) and Westpac’s purchase of St George ($17 billion).
By contrast, consumer staples, healthcare, media and entertainment, real estate and retail sectors had witnessed significant falls in deal volume in the period, compared to calendar year 2007.
The survey found the overall M&A market had unexpectedly experienced significant growth in the dollar value of deals during the second half of calendar year 2008, but on the back of lower transaction numbers.
However, the current decrease in transaction numbers is expected to show through the financial data in the first half of calendar year 2009, according to KPMG’s national head of M&A Robert Bazzani.
He added that Australian executives expect the outlook for M&A activity to weaken in the first half of 2009, as Australian businesses “abandon or postpone prospective deals in response to economic conditions, credit availability, equity market pricing and liquidity”.
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When it comes to M&A activity, the share of financial buyers such as private equity firms in Australia fell from 67 per cent to 12 per cent in the last financial year.
