The average value of merger and acquisitions (M&A) soared to $129 million during the second quarter of the financial year, overshadowing a dip in the number of deals done during this period.
The latest M&A Review from HLB Mann Judd Sydney found that the average deal size had increased significantly from $92 million in Q2 FY21 driven by a rise in the number of deals valued at over $100 million.
A total of 334 M&A transactions were completed in Australia during the quarter, down 5 per cent from the 351 deals seen a year earlier.
HLB Mann Judd Sydney corporate advisory partner Simon James said that market uncertainty had provided new opportunities for quality companies looking to expand.
“There is so much capital in the market and debt remains cheap so opportunistic businesses are looking for comparable organisations that could either add value to their existing offering or are a natural extension to the core product or service,” he said.
“The switch from quantity of deals transacted to quality of deals also suggests that businesses may be willing to pay a premium now, given the cost of capital is likely to increase from here on.”
The outlook for M&A activity remains strong for the remainder of the year according to Mr James, with an increase in both the number and size of deals expected.
“There are always good businesses out there – it’s a question of finding them and providing them with the right capital, at the right time,” he added.
HLB Mann Judd predicted that the healthcare, technology and agriculture industries would continue to see high levels of M&A activity moving forward.
The firm said that telecommunication services and financials were the top sectors by deal value in the last quarter, while materials, consumer discretionary and industrials saw the highest number of transactions.
Hostplus and Charter Hall’s takeover of ALE Property Group, which HLB Mann Judd valued at $2.98 billion, was the top deal by transaction value during the quarter.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.