M&A Quarterly Update for Q1 2025

Explore the data for January to March 2025 New Zealand deal activity round-up

In Q1 2025, 36 deals were announced. While this is a 14% decrease from the 42 deals in Q4 2024, it also reflects a significant increase of 38% compared to the 26 deals in Q1 2024. Despite ongoing political and economic uncertainties that could impact future quarters, the current momentum indicates a promising start to 2025.

The data reveals:

Trade buyers dominated deal activity, representing 31 of the 36 transactions (86%). This involvement underscores their strategic focus on expanding and consolidating positions across sectors. In contrast, private equity firms participated in just one transaction, a notable decrease from seven in the preceding quarter.
Overseas buyers accounted for 53% of deals, indicating strong international interest in New Zealand businesses. The United States and Australia led this offshore interest, participating in 6 and 5 deals, respectively.
The Technology, Media, and Telecommunications (TMT) sector emerged as the most active with 8 deals, followed by the Consumer, Financial Services and Industrials and Chemicals sectors which each recorded 6 deals.

Number of deals per quarter 2021 to 2025

Deals by sector and buyer type

Deals by country and buyer type

Note:

The data has been filtered to exclude: (i) real estate transactions; (ii) early stage venture capital transactions where size is stated or estimated to be less than $1.5m; (iii) transactions announced but yet to complete; (iv) other transactions where applicable.

Sources: Mergermarket, CapitalIQ, Eikon, PwC analysis (4 April 2025)

Article How is market volatility shaking up private company valuations?

Video

How market volatility shakes up private company valuations

Watch Nick McVerry, Partner, discuss how global market volatility and tariff-related uncertainties are impacting private company valuations.

Setting the scene

New Zealand share market performance

The first four months of 2025 have been marked by heightened volatility in global share markets, in particular in the month of April as a result of the “Liberation Day” tariff announcements by the US Government. In New Zealand the NZX All Index fell by 10% in the first four months of the year. Among the 115 companies represented in the index, almost two-thirds experienced a decrease in their share price with an average reduction of 14%. But there are winners - 37 companies experienced an increase averaging over 20%.

Performance by sector

Sector-wise analysis shows broad declines. The Consumer Staples sector was the exception, with positive share price performance on average. Health Care witnessed the sharpest decline; the 13 entities in this sector showed a median share price decrease of 11%.

How did New Zealand markets fare compared to the US?

Comparatively, the US market, represented by the S&P 500 (an index tracking the 500 leading companies on US stock exchanges), experienced similar volatility across the same period. Interestingly, the S&P 500 ended only 5% down after a resilient rebound in the latter half of April.

This chart compares the NZX All and S&P 500 indices from January through to the end of April.

What’s the impact on private company valuations?

Private company valuations are shaped by various factors, including the trading multiples of publicly listed companies in comparable sectors. The influence of these multiples on private valuations requires careful consideration such as:

Market movements: Even though there has been a decline in listed company multiples recently, average EV/EBITDA multiples remain in line with historical averages, and are higher now than they were 12 months ago. The decision to acquire a private company generally requires a longer-term investment horizon. Therefore short-term fluctuations of the listed market become less relevant in the short term.

Risk factors: Private companies typically have higher earnings volatility due to limited diversification (e.g., market, geography, and customer base) and are a smaller size compared to public entities. Key person risk also plays a larger role in private businesses, affecting valuations through typically lower multiples.
Liquidity and control: Listed companies benefit from being easily tradable while private companies are inherently less liquid. Generally, this supports higher multiples for listed companies. Offsetting this, in part, is listed company multiples reflecting minority stakes, while for private companies, valuations are often considered for the entity as a whole. Adjustments are therefore required to consider control premia.

What does it mean?

Evaluating earnings multiples for listed companies and their trends offers insightful benchmarks for private company valuations. Yet, earnings often play a more significant role in value determination, for example:

Direct impact of tariffs: Businesses operating in sectors directly exposed to US tariffs (for instance, those who export products to the US) may experience the most immediate possible impact to earnings. Both the uncertainty around the extent of those implications, and the negative earnings impact itself (once known) are likely to negatively affect the value of these businesses and potentially defer M&A activity for businesses where the exposure is largest, either as targets or acquirors.
Second-order effects: Even companies not directly impacted by tariffs are vulnerable to second-order effects, including changes to economic conditions and outlook such as foreign exchange rates, interest rates, and economic growth. These are factors that have potential to affect earnings of a much broader range of companies. The IMF recently published a revised World Economic Outlook forecast, incorporating tariff announcements through to 4 April 2025, which was for a downgrade of about 0.8 percentage points relative to the January 2025 WEO update. They also state that the subsequent 90 day pause on tariffs announced since 4 April, even if extended indefinitely, does not materially change the global outlook compared to their reference forecast, noting policy-induced uncertainty as a key issue.

Overall, the “Liberation Day” announcement has increased uncertainty in global markets and concerns about global growth. The impact on individual sectors and companies operating within a given sector in many cases is unclear, and will need to be watched carefully over coming quarters to stay on top of policy developments.

Our Value in Motion thought leadership provides insights into how disruptions are reshaping industries, with AI and megatrends redefining value creation and creating growth opportunities beyond traditional industry boundaries. Our research outlines three scenarios for the next decade—trust-based transformation, tense transition, and turbulent times—to help leaders navigate challenges and capitalise on opportunities amidst post-"Liberation Day" uncertainties.

LSEG, rank by number of deals PwC has been the number one mid-market M&A advisor in New Zealand for the last twenty years.

How can PwC help

PwC New Zealand’s Corporate Finance and M&A team is the largest in New Zealand, with a proven track record across a diverse range of sectors. With a nationwide presence led by nine partners, we offer a full range of M&A advisory services including support for divestments, acquisitions, capital raisings and strategic reviews.

Our links to the global network of PwC firms provides relationships with key global market participants, and our close relationship with our Australian colleagues ensures a comprehensive understanding of the Australasian marketplace.

Our M&A team has been ranked the number one firm in New Zealand for the amount of M&A deals by Thomson Reuters (now LSEG) for the last 20 years.