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Grant Thornton has released the findings of its 2022 Dealtracker, an analysis of the Australian mergers and acquisition (M&A) and equity markets from 2020-211. The COVID-19 pandemic was a constant factor in this Dealtracker’s reporting period, however it failed to reduce the appetite for deals and – in many cases – positively influenced investments with deal volumes reaching record levels not seen for over a decade.
A record period saw total IPO funds raised grow by 712 per cent to $20.6 billion. The IPOs were dominated by offer sizes of over $500 million which accounted for 43.9 per cent of the total funds raised in this Dealtracker reporting period. Comparing the previous three Dealtracker periods to this report, the average offering size has increased in all categories.
In line with the upward trend evident in prior Dealtrackers, this report reiterated the resilience of International buyers into the Australian market with overseas purchasers comprising 30 per cent of transactions, up from 29 per cent in the previous Dealtracker period. This is validation of the attractiveness of Australian assets given the barriers that were put in place throughout the pandemic and cements Australia’s position as a comparatively better trading environment than alternative foreign markets. With the easing of travel restrictions and overall economic activity levels increasing, this trend is expected to persist. Specifically, buyers from the US and Canada remained the largest volume of offshore acquirers, with 50 per cent of deals, which is higher than 43 per cent from the prior Dealtracker period. US and Canadian acquirers continued their strong focus on Information Technology business deals.
As observed in prior reports, the Australian economy’s movement from a resources-led economy to a knowledge-based service economy has been accelerated throughout this Dealtracker period. As Grant Thornton predicted in previous reports, the Information Technology sector has pushed the greater M&A activity levels overall. Technology sector deals represented 42 per cent growth from the preceding 18 month period to now exceed Industrial, and has become the largest industry segment by deal volume – boosted by pandemic market conditions.
Paul Gooley, Partner & National Head of Corporate Finance at Grant Thornton said: “This Dealtracker showed M&A activity levels have been remarkably resilient. As we look forward to the economy reopening resulting in improved market conditions and the continued weight of money, we should see deal activity remain strong and diversify across a greater number of sectors.
“Notwithstanding this position, should current inflationary pressures lead to increased funding costs and lower consumer spending and investment, there remains a risk that deal activity will slow and valuations ease as we are starting to see in IPO markets.
“High M&A volumes in the Information Technology sector are predicted to remain as the importance of investing in technology is a key driver to maintain competitiveness, serve post-pandemic customer preferences, and to deploy new growth strategies across the wider business landscape.”
1 The 2022 Dealtracker covers transactions during the 18 month period from 1 July 2020 to 31 December 2021. This survey is limited to going concern business sales, excluding those with a significant real estate nature and greater than $5m value. Grant Thornton’s Dealtracker was first released in 2012 and – now in its eighth edition – has more than a decade’s worth of deal activity and analysis to report.
Press Release
Grant Thornton releases its 2022 Dealtracker reporting strong M&A resilience and record equity market growth
21 Apr 2022
Grant Thornton has released the findings of its 2022 Dealtracker, an analysis of the Australian mergers and acquisition (M&A) and equity markets from 2020-211. The COVID-19 pandemic was a constant factor in this Dealtracker’s reporting period, however it failed to reduce the appetite for deals and – in many cases – positively influenced investments with deal volumes reaching record levels not seen for over a decade.
Dealtracker Snapshot:
A record period saw total IPO funds raised grow by 712 per cent to $20.6 billion. The IPOs were dominated by offer sizes of over $500 million which accounted for 43.9 per cent of the total funds raised in this Dealtracker reporting period. Comparing the previous three Dealtracker periods to this report, the average offering size has increased in all categories.
In line with the upward trend evident in prior Dealtrackers, this report reiterated the resilience of International buyers into the Australian market with overseas purchasers comprising 30 per cent of transactions, up from 29 per cent in the previous Dealtracker period. This is validation of the attractiveness of Australian assets given the barriers that were put in place throughout the pandemic and cements Australia’s position as a comparatively better trading environment than alternative foreign markets. With the easing of travel restrictions and overall economic activity levels increasing, this trend is expected to persist. Specifically, buyers from the US and Canada remained the largest volume of offshore acquirers, with 50 per cent of deals, which is higher than 43 per cent from the prior Dealtracker period. US and Canadian acquirers continued their strong focus on Information Technology business deals.
As observed in prior reports, the Australian economy’s movement from a resources-led economy to a knowledge-based service economy has been accelerated throughout this Dealtracker period. As Grant Thornton predicted in previous reports, the Information Technology sector has pushed the greater M&A activity levels overall. Technology sector deals represented 42 per cent growth from the preceding 18 month period to now exceed Industrial, and has become the largest industry segment by deal volume – boosted by pandemic market conditions.
Paul Gooley, Partner & National Head of Corporate Finance at Grant Thornton said: “This Dealtracker showed M&A activity levels have been remarkably resilient. As we look forward to the economy reopening resulting in improved market conditions and the continued weight of money, we should see deal activity remain strong and diversify across a greater number of sectors.
“Notwithstanding this position, should current inflationary pressures lead to increased funding costs and lower consumer spending and investment, there remains a risk that deal activity will slow and valuations ease as we are starting to see in IPO markets.
“High M&A volumes in the Information Technology sector are predicted to remain as the importance of investing in technology is a key driver to maintain competitiveness, serve post-pandemic customer preferences, and to deploy new growth strategies across the wider business landscape.”
1 The 2022 Dealtracker covers transactions during the 18 month period from 1 July 2020 to 31 December 2021. This survey is limited to going concern business sales, excluding those with a significant real estate nature and greater than $5m value. Grant Thornton’s Dealtracker was first released in 2012 and – now in its eighth edition – has more than a decade’s worth of deal activity and analysis to report.
Experts / Authors
Paul Gooley
Paul specialises in advising clients on acquisition, fund raising, divestment and financial modelling assignments across a diverse range of industries and markets.
View ProfileJannaya James
Jannaya has over 18 years’ experience providing insightful advice to a range of small and large corporations in respect of valuations of shares, businesses and intangible assets for a range of purposes.
View ProfileMikala Spark
Senior Communications Manager at Grant Thornton Australia
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