24th CEO Survey

M&A activity is stronger than ever

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We saw a strong return of M&A activity over the second half of 2020 with a wave of completed deals and new transactions. We don’t see this trend changing anytime soon.

Strong equity markets globally, open debt markets and plenty of available capital means that many businesses in strategic industries like healthcare, food, education, as well as those with online platforms, are in high demand.

Private equity firms who assessed their portfolios in the early part of 2020 are now looking at their entry and exit options in 2021.

Any concerns about border closures and travel restrictions leading to reduced market activity have been completely dispelled. We are doing, and seeing, substantial transactions where the buyer or investor is overseas, has never set foot in New Zealand or met the vendors face- to- face. For example the sale of Mighty Ape to Kogan in Australia. This scenario is one we wouldn’t have seen 18 months ago.

We have found that working on deals virtually has made the whole process more efficient and buyers are seeing the benefits. There was a well-established process for buying and selling. But, through using technology, it has been streamlined. Presentations and meetings can be lined-up in a way that doesn’t affect the operating rhythm of a business or take people out for long periods. Travel time is no longer a problem. 

Building trust in the information provided to buyers is crucial. We are seeing businesses investing in better data insights so they can demonstrate and evidence their strategic advantage to potential acquirers and investors. COVID-19 has led to increasing interest from buyers in different sectors. Take healthcare assets as an example. Investors used to see these as fairly unstable assets but this perception has now changed with the sector being key to the country’s recovery. 

There are still sectors that are under a significant amount of stress like tourism and traditional bricks and mortar retail. We have seen less M&A and restructuring activity in these sectors than expected but this is likely to change. I expect to see a fair amount of consolidation as businesses create synergies and efficiencies to survive.

%
of New Zealand CEOs are planning new M&A activity to drive growth
%
are planning a new strategic alliance or joint venture
%
are planning to launch a new product or service

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Mark Averill

Mark Averill

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Karl Dwight

Partner, PwC New Zealand

Tel: +64 21 396 361

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Lara Hillier

Partner, Internal Audit and Governance, Risk & Compliance Leader, PwC New Zealand

Tel: +64 21 240 8640

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