The following article is a chapter from our latest report, M&A in Motion.
Access the full report here.
Private Equity
The Prediction for 2026
Exit pressure and creative deal structures Limited Partner pressure to release gains and return capital will influence private equity transactions, driving sponsor-to-sponsor sales, continuation vehicles and a busier secondary market as managers work through ageing portfolios. Strong macro factors including stabilising interest rates should lift deal flow.
The exit environment appears to be stabilising, which will see more firms considering the possibility of pursuing an IPO this year given improving market signals, rather than relying on more predictable private market exits. Conditions for IPOs appear stronger in 2026 as bid-ask spreads narrow, global markets show more consistent investor engagement and several recent mid-market floats are performing adequately in secondary trading.
Exit pressure is finally meeting a more cooperative macro backdrop. With stabilising rates, tighter MAC drafting, and earn outs doing the heavy lifting on valuation gaps, sponsors are leaning into secondary processes, continuation vehicles and select IPOs. The winners in 2026 will be those who price regulatory friction early and use creative deferred consideration to keep deals moving.”
Gordon McCann
Regulatory uncertainty
Additional regulatory hurdles will present significant uncertainty for private equity transactions in 2026, creating execution risk and potentially stagnating deal flow. The introduction of Australia’s new mandatory merger control regime, ongoing FIRB interventions in sensitive sectors, ASIC’s report into capital markets, and unresolved product disclosure rules mean dealmakers must navigate multiple layers of regulatory complexity that threaten transaction timetables and reduce deal certainty. Hamilton Locke remains closely engaged with industry developments
through its representation on the Australian Investment Council committees, providing clients with practical insights as these regulatory changes unfold.
ACCC merger
Since 1 January 2026, a broad range of notifiable acquisitions now require ACCC clearance before completion, with all filings published on the ACCC’s website within a day of notification. This gives anyone (e.g., competitors, customers, employees) the opportunity to engage with the regulator and potentially disrupt transactions. In the short term, guidance on waivers, thresholds and exemptions continue to be refined in practice, leaving many questions unanswered and adding to deal uncertainty.
FIRB
Whilst most transactions continue to receive FIRB approval, deals in sensitive sectors face heightened political scrutiny. The Mayne Pharma and Cosette dispute, shows that even conditional approvals may not be enough to get transactions over the line in healthcare and critical supply chains. Private equity bidders face the risk that late-stage political
considerations will derail their deals.
ASIC
Australia’s regulatory environment is set for greater regulatory scrutiny in 2026, with ASIC’s REP 823 (Advancing Australia’s evolving capital markets: Discussion paper response report) signalling a sharper focus on private market integrity. Key areas relevant to private equity include closer scrutiny of private credit practices, increased expectations around fees, conflicts and disclosure, and a stronger regulatory interest in improving data quality and reporting across private markets, reflecting the rapid growth and uneven maturity of the sector. While any reforms are expected to create a more transparent framework in the long run, the review period will continue to generate regulatory uncertainty until any revised settings are fully defined and operational. Separately, ASIC’s move to bring forward the Regulatory Guide 97 (Disclosing fees and costs in PDSs and periodic statements) review to FY26/27 has been well received after sustained industry advocacy to modernise fee disclosure settings and address distortions affecting capital allocation, particularly for private equity and venture capital. The Australian Investment Council has described the review
as overdue and important for ensuring clearer and more balanced disclosure rules that better support investment in growth stage businesses.
Public Markets
Despite regulatory headwinds in the form of new merger controls, the prospect of increasing M&A in the listed resources sector should make 2026 an active year for public M&A deals in Australia.
While 2025 was a relatively steady year for M&A-related equity raisings on the ASX, with growth financings dominating the market, we anticipate a similar trend in 2026. However, the evolving regulatory landscape and jurisdictional risks are expected to introduce additional complexity to deal execution.
Public M&A will be active but more structured: schemes remain the vehicle of choice, while the new merger control regime adds time, cost and public scrutiny to every step. Expect resources names to dominate the headlines, and for targets to demand tighter bidder obligations on ACCC and FIRB approvals, including reverse break fees and ticking fees to mitigate increased regulatory risk.”
Guy Sanderson
The Prediction for 2026
Merger controls to create deal friction
We expect that many public M&A deals will be weighed down due to regulatory changes coming into effect this year, in particular the new merger control regime. These changes will capture many
more transactions than in the past, including (from 1 July 2026) certain acquisitions of a minority interest above 20% in a listed company. Even where there is no competition concern in relation to a transaction, the new regime will create friction due to:
- timing for the mandatory notification and/or waiver application, which may delay closing;
- loss of confidentiality for mandatory filings, which may cause parties to file only once the deal is signed and has become public, which will exacerbate the potential timetable delays and
regulatory uncertainty; and - fees for the ACCC process, which will lead to increased transaction costs.
FIRB uncertainty
To a lesser extent FIRB risk will be front of mind for foreign bidders, including because of the political uncertainty created by the Mayne Pharma decision. Bidders for Australian critical minerals assets will also need to contend with increased scrutiny of transactions in this increasingly geopolitically sensitive sector. Listed resources companies in the M&A spotlight Copper, silver and gold are at all time highs, and demand continues to increase for rare earths and other critical minerals to support the electrification agenda and data centre construction boom. We expect increased takeover interest in ASX listed resources companies from both trade buyers looking to acquire new feedstock or diversify their portfolio, and financial bidders such as private equity funds
looking to take a position on lucrative commodities.
Did the Market in 2025 behave in line with our expectations?
Overall, our 2025 market outlook was borne out.
Schemes of arrangement to remain the preferred public M&A structure
Looking at public M&A deals in 2025 (counting completed deals and current deals as at 31 December 2025, but excluding unsuccessful and withdrawn deals), schemes accounted for approximately 68% of deals by number. The number would be even higher by value of completed deals, as larger deals almost always require the predictability afforded by the scheme process. That said, takeover bids will still have a role to play in a competitive situation, in particular there they can leverage the tactical advantage of a pre-bid stake. We saw this in the battle for control of New World Resources Limited in 2025, where Hamilton Locke acted for the target in respect of one scheme, two takeover bids, and eight separate bid price increases before a victor emerged.
Private capital drawn to infrastructure assets
We observed continued private capital interest in infrastructure-related assets, consistent with the broader trend of private capital and superannuation funds seeking stable, long-term returns. The
government’s push towards critical minerals investment, including the establishment of a new A$4 billion critical minerals infrastructure facility, combined with rising commodity prices, will continue to contribute to increased deal activity in these sectors.
Influence of private capital
2025 again saw a slide in the number of companies listed on ASX, with the number of equity issuers falling by a net 70 to end the year at 1,915. Another year of low new listing numbers was a key driver of the net decrease. Private equity owners of potential IPO companies have become more risk averse in their approach to using an ASX listing as an exit, using dualtrack processes (IPO or trade sale) to find the best price in a market where private valuations are often higher.
ASX and ASIC took steps during 2025 to streamline the IPO process timetable, hoping to strengthen the attractiveness of public markets given the key role they play in the Australian economy.
Tech companies looking to the US instead of ASX
In 2025 tech IPOs on the ASX faced significant headwinds, with listings such as Saluda Medical, Epiminder and Carma trading below their IPO offer prices. These late-year disappointments highlighted the persistent challenges facing tech listings in Australia, particularly the valuation gap between what investors are willing to pay and the perceived potential of early-stage technology ventures. Australian tech companies with global ambitions continue to look towards US exchanges, where deeper capital pools and greater investor appetite for growth technology companies offer more attractive listing conditions.
Takeovers Panel looking at unlisted companies
There were a small number of Takeovers Panel applications made in 2025 in relation to unlisted companies which at some point had more than 50 shareholders. Interestingly, the matters concerned shareholder disputes where other legal avenues were either unavailable, or were more expensive to access (given the Panel’s relatively low application fee). We expect to see more disputes brought before the Panel as the availability of private capital enables companies to delay listing for longer.
Negotiation Tools from HL 2025 Deal Data
Implementation agreements for schemes and recommended takeover bids are more highly regulated than private M&A sale agreements, and largely follow a familiar path. Two key negotiation points that we see becoming more important in the year ahead are:
Material adverse change conditions
The Mayne Pharma decision has fundamentally changed how parties will approach material adverse change clauses. They need to be a lot more precise, formulaic and objectively measurable, moving away from more general concepts involving causation or a likelihood of future effects which can be hard to prove to the high standard demanded by the court. Arguably this is merely a continuation of a theme ASIC flagged back in September 2022 in a Corporate Finance Update, where ASIC said they expect material adverse change conditions to contain objective and quantifiable standards by which the parties to a transaction, and their securityholders, can clearly determine whether a material adverse change has occurred.
Bidder’s regulatory approval conditions
We anticipate the increased legal and policy risks regarding ACCC and FIRB approval conditions will flow through to the pre-deal negotiation phase. Parties will spend more time analysing potential regulatory triggers, and assessing the timetable impacts. More attention will also be turned to the bidder’s role in obtaining the regulatory approvals it will require, and this could be a combination of:
- more detailed obligations on the bidder to apply for and obtain its approvals, and more restrictions on taking action that could put those approvals in jeopardy (as Cosette, the US bidder for Mayne Pharma, is claimed to have done when it publicly changed its intentions in relation to keeping manufacturing facilities open in South Australia); and
- targets seeking reverse break fees from bidders where regulatory approvals are not obtained, whether or not the bidder was in breach of its implementation agreement obligations. There is
scope for targets to seek reverse break fees higher than 1% of the bid value as the Takeovers Panel policy on break fees does not regulate a reverse break fee to the same extent.
Private Credit
Market Health Check: Robust
The private credit sector is expected to maintain strong momentum in 2026, supported by continued capital inflows, improving market fundamentals, and banks remaining constrained by regulatory capital requirements.
Private credit maintains strong momentum into 2026, with continued growth driven by sustained investor demand for higher yields, borrowers’ need for flexible financing, and emerging distressed debt opportunities.”
Monty Loughlin
The Prediction for 2026
We anticipate that private credit will continue its robust growth, expanding at a similar pace to previous years. Capital inflows are expected to remain strong as investors seek stable income amid global uncertainty. Elevated interest rates should continue to support investor returns and moderate borrower demand. We predict that mezzanine and private credit led distressed debt transactions will be a key feature of 2026 in pursuit of higher yields, with the energy and resource sectors a particular focus for investment as regulatory uncertainty and project feasibility challenges create opportunities.
Did the Market in 2025 behave in line with our expectations?
The market largely aligned with expectations. Private credit continued its growth trajectory and regulatory scrutiny materialised, with ASIC releasing its November 2025 surveillance report identifying areas requiring improvement across governance, fee transparency, valuations and conflict management. Borrowers chose private credit for speed and flexibility despite higher costs. The distressed lending segment emerged as predicted, with managers playing more active roles in restructuring.
Global uncertainty was higher than anticipated but this benefited Australian private credit as a safehaven investment. The expansion of retail investor access exceeded expectations, raising new regulatory considerations, while emerging distress positioned private credit providers for an increasingly active restructuring role.
