New Zealand leading the way in M&A activity

by NZ Lawyer17 Mar 2014
The current merger and acquisitions climate is seeing a number of ‘positive’ deals to drive company growth and expansion, according to KPMG New Zealand’s latest M&A Predictor.

The company says the good news story for New Zealand continues, with the latest figures showing both rising capacity and confidence.

Tony McNaught, KPMG NZ’s head of mergers and acquisitions, says the market is active and buoyant.

“The kind of deals we’re now seeing in the marketplace can be characterised as positive deals. Companies are making proactive, growth-based decisions – they’re seeking out opportunities for enhanced earnings and performance.”

This is a very different picture from the M&A climate a few years ago, says McNaught.

“We’re seeing fewer deals being done because the banks have stepped in, or because poor profitability has left firms cash-strapped. It’s certainly a different beat from the more negative drivers for M&A activity we have seen over the last few years.”

He adds that the future climate has different implications for business owners, depending whether they are looking to acquire or divest.

“For business owners who are thinking of selling, this latest M&A Predictor indicates there are currently a healthy number of buyers in the market,” says McNaught.

“On the other side, if you’re looking to grow by acquisition, you’re going to have a decent amount of competition. And based on the latest forward multiples, the price you’re likely to pay is on the rise.”

NZ leads the way in M&A activity
  • Around 170 deals were completed over the past 12 months, compared to 140 in 2012.
  • Trailing deal values remained relatively stable throughout 2013, indicating that average deal value remains fairly consistent over the year.
  • Foreign direct investment from Asia, particularly China, is likely to increase in importance for New Zealand.