M&A Outlook – What to expect in 2022

The Australian Growth Company Awards (AGCA) together with Hamilton Locke and Grant Thornton, long time sponsors of the Awards, recently hosted a soft launch of the 2022 Awards with the following “star studded” panel discussing the M&A outlook for 2022:

  • Louise Haslehurst from Quadrant Private Equity
  • Zachary Midalia from Alceon Private Equity
  • Chris Munday from Qscan Radiology
  • Daniel Hutchinson from MA Financial Group
  • Paul Gooley, Partner at Grant Thornton (as moderator)

These experienced market participants discussed the current trends in deal activity, how deals are being done and the relevant factors that will need to be considered when seeking to undertake M&A over the next 12 months, with 2022 shaping up to be another productive year in the M&A sector.

Looking back

Despite the unprecedented period of disruption caused by COVID-19, 2021 was a historic market for M&A transactions with record-breaking deal activity across most sectors.  With deal volume and values up and strong competition for assets, a more favourable sellers’ market ensued.

Healthcare and Technology have remained strong during the recent pandemic and are likely to continue to see growth in 2022, as evidenced by acquisitions by Qscan (click here), recent interest from KKR in Ramsay Healthcare and Alceon Private Equity’s acquisition of IT managed services group, EFEX. 

The second half of 2021 saw heightened M&A activity, as reflected by the stretched warranty and indemnity insurance market.

Patient start

Macro factors such as the ongoing pandemic, international conflict, geopolitical tension, global supply chain strains, low (but rising) interest rates, recent falls on local and international share markets and the recent change of Federal government, all have the potential to impact upon the appetite for deals in 2022. 

Combined with the heightened deal activity in 2021, such macro factors have also focused the attention of many private equity funds on the integration of recently acquired assets and the broader consolidation of their portfolios.  That said, with the consistent recent level of fundraising by private equity funds, the level of interest from this sector in M&A is expected to remain strong throughout 2022.

Disconnect in valuation expectations

With the worst of the pandemic hopefully now behind us, assessing the financial impact of COVID as it relates to forecasted revenue and expenses, has led to a slight disconnect in valuation expectations between buyers and sellers. 

Coupled with a smaller multiple available across some sectors, it may take a little bit of time for parties to meet in the middle.    

Public to privates

While the IPO market may not hit the record-breaking number of listings of 2021, it is still a very attractive option for many established businesses with a strong financial history.  However, we may see more attention on public to private transactions this year.  In particular, with a crowded private equity environment, those funds willing to entertain public to private deals may find more space to play in.

Companies and investors looking to take advantage of the current market should reach out to experienced advisors such as Hamilton Locke, Grant Thornton and MA Financial Group to capitalise on the various upcoming opportunities in play.

The Australian Growth Company Awards

Launched in 2012, the AGCA are pleased to celebrate their 10 year anniversary this year. Since their inception the AGCA have recognised companies that demonstrate excellence, sustainable growth, innovation, integrity and contribution to the community.

Participants in the AGCA have the opportunity to:

  • Gain industry recognition for successes, growth and market leadership, particularly over the last two years of COVID-19;
  • Raise their business profile through positive media exposure and publicity; and
  • Network with potential investors and business partners.

Companies with an annual turnover of $25 million to $600 million can enter various categories including:

  • Growth Company of the Year Award, which draws from industry categories of Consumer Goods, Financial Services, Business Services, Technology and Health & Life Sciences.
  • Women in Leadership Award
  • IPO of the Year
  • Private Equity Deal of the Year
  • Turnaround Deal of the Year
  • Company to Watch of the Year ($5m threshold)
  • Sustainability and Cleantech of the Year  

Nominations open on Tuesday, 7 June 2022, closing on Tuesday, 9 August 2022, with the winners to be announced at a gala function at The Ivy, Sydney on Thursday, 13 October 2022.

If you know a company that has achieved excellence, sustainable growth, innovation, integrity and has made significant contributions to the community over the last two years, follow The Australian Growth Company Awards or join our mailing list for regular updates on the Awards here.

For more information, please contact Gordon McCann, Partner or Beatrice Drumore, Lawyer.