As the fog of macroeconomic and geopolitical complexities that contributed to a soft market in 2023 clears, 2024 saw a marked increase in dealmaking driven by strong investor confidence and availability of assets.
Recognised in Mergermarket’s 2024 Global & Regional M&A Rankings, Hamilton Locke has advised on over 93 M&A deals valued at USD2.51 billion in 2024. By conducting an in-depth analysis of these deals, we provide a contextual framework for dealmaking in 2025 and beyond.
This report outlines our findings and insights drawn from an extensive review of deal trends and negotiation points witnessed in the Australian mid-market M&A sector from January to December 2024.
We delve into the key themes and insights gleaned from our analysis, with a specific focus on critical sectors including FIRB, competition law, financial services, new energy, carbon markets, private equity, restructuring and tax.
As we chart the course for 2025, our report reflects on the trends that defined the past year and anticipates the trajectory of key negotiation points across each sector.
Key findings from the 2024 report:
- Bridging the valuation gap: Persistent valuation tensions were mediated by a mix of deferred consideration structures, broader W&I insurance coverage terms and non-control transactions. Deferred considerations were proven effective as approximately 40% of transactions reviewed had deferred consideration payable in tranches.
- Rise of Private Capital: More and more borrowers are opting for private debt due to their swiftness, increased leverage, and tailored terms. However, the accelerated growth also drew attention to issues around transparency and conflicts of interest.
- Thorough due diligence: With a tighter market, due diligence adopted a more sophisticated approach with greater understanding of the nature and impact of risks, particularly in technical and regulatory due diligence.
- Specific indemnities favoured: Buyers sought specific indemnities in 48.48% of transactions reviewed. 46.88% of those transactions had indemnities for employee liabilities.
- Broader W&I coverage: Competitive W&I insurance market saw lower premiums and broader coverage that includes previously excluded areas.
- Completion accounts still king: 60% of transactions reviewed contained adjustment mechanisms. 2.5% of those transactions contained a locked box mechanism.
- Schemes of arrangements: The preferred acquisition mechanism for transactions involving public target companies was schemes of arrangements.
- Regulatory impacts: 2024 experienced a regulatory reform with strong enforcement activities from ASIC, AUSTRAC, and the ACCC. The impact of the introduction of a new mandatory merger clearance regime on the M&A landscape remains to be seen.
