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PwC New Zealand M&A Quarterly Update

For the Third Quarter of 2021

Welcome to the latest PwC New Zealand M&A Quarterly Update. 

In this edition, we look at M&A in New Zealand from July to September 2021 and find that the record levels of activity seen earlier in the year continue. One of the busiest sectors for M&A activity right now is technology and in this Update we consider what’s driving interest in local tech businesses. We also explore the recent rise in exceptional valuation outcomes and outline the characteristics of businesses achieving these results.

Record levels of New Zealand deal activity continue in Q3 2021

Record levels of deal activity continued in Q3 for 2021 with 54 deals completed or announced. The persistent low interest rate environment has led to reduced cost of capital and higher valuations creating more sellers and a strong appetite for merger and acquisitions from buyers. 

Activity has likely been buoyed by deals that were put on hold throughout 2020 coming back to market. Deals have also been brought forward due to uncertainty surrounding the business environment as we continue to navigate the impacts of COVID-19. 

Number of deals per quarter 2019 to 2021

In Q3 2021 a record 54 deals have been announced or completed.

Number of deals by sector and buyer type for Q3 2021
Number of deals by country and buyer type for Q3 2021

What the data reveals

Source: MergerMarket, CapitalIQ, Factiva, and Thompson Reuters Eikon and compiled by PwC.

1. M&A activity driven by local buyers remains strong.

37 of the 54 deals announced or completed during Q3 involved a New Zealand buyer. This continues the Q2 trend of heightened local activity in comparison to previous years.

2. International cross-border M&A activity has however remained strong, well ahead of 2020 pandemic levels and slightly ahead of 2019 levels.

17 cross border M&A deals were announced in Q3, with almost half of that activity coming from Australia. Australia continues to be a strong contributor to buying local New Zealand businesses.

3. Technology, Media, Telecoms (TMT) again dominated deal flow, although pharma, medical and biotech activity was also strong in Q3.

8 deals were announced or completed in the pharmaceutical, medical and biotechnology sector making it the second most active sector followed by consumer and financial services.

M&A and tech: the hottest sector for deals

Playback of this video is not currently available


Regan Hoult video - MA Update

Globally, technology is a highly active sector for M&A activity and this is equally true in New Zealand - four of the top 10 New Zealand deals for the period ending June 30 2021 were in the tech sector.  

The latest edition of Startup Investment reveals a thriving early stage investment market in New Zealand, which will help support increasing numbers of NZ tech unicorns. In the first half of 2021, 66 deals were recorded and nearly $60m invested by early stage investors. Of this, Software & Services accounted for 43.8% of the funds invested and Deep Tech 42%. 

Watch Regan Hoult, Corporate Finance Leader, talk about M&A activity in the tech sector.

What’s driving interest in the New Zealand tech sector?

New Zealand tech firms are building a strong reputation for world class IP addressing global market opportunities and challenges.  This has led to strong interest from a range of international trade and financial investors. Recent examples include Timely, Vend, Education Perfect, ezyVet and Seequent.  

International investors find world-class IP in this country with a maturity that can be quickly scaled into global markets. Similarly local companies are often set up with a global ethos. Founders understand the need to build software that’s best in class, highly spec’d, and developed quickly and efficiently. The New Zealand ‘can do’ attitude also helps to push through roadblocks to develop truly unique IP.

Resilience to the impact of COVID-19

Many tech businesses have continued to show strong growth despite the effect of the pandemic. The accelerated move to cloud and digital services has provided strong tailwinds for the sector.  

Track record of exits attracts investors 

Capital providers increasingly see New Zealand tech as a place to invest and sophisticated operators are producing high value exits. While it was unusual to see exits in the $100m+ category three or four years ago, we are now seeing this more frequently. It enhances our international reputation as a place to find opportunities and invest.

What are the benefits of M&A for the tech sector?

While New Zealand has significantly improved its commercialisation nous, there is still a gap in taking local businesses to global markets. Our companies benefit from investment partners offering this capability.

The capital released from M&A transactions is often re-invested by founders/investors into other local startups. The insights gained from scaling into a global tech business can be applied to new ventures, helping to propel further success.  

The benefits of scaling globally

Global expansion and the growth opportunities this brings is often beyond the resources and capability of most local companies. Partnering or selling to an offshore VC can provide access to governance, networks and management professionals that will enable a company to expand to a new level. 

Done right, M&A can help these companies increase speed to market, outflank competitors and relieve pressure from threatening disruptive market forces. This can also accelerate the achievement of shareholder objectives and enhance value creation.

What are the trends?

While technology remains a macro trend for M&A activity in Q3 2021, we’ve seen the emergence of smaller trends in specialist areas. These include:

  • Software as a Service for SMEs. This is a market New Zealand is building a strong reputation for. 

  • Agritech. New Zealand has an international reputation for farming and food production, and is well known for efficiency and innovation.  

  • Deep tech. This is an ongoing trend that has withstood the effect of COVID-19 due to the long-term nature of the projects.  

  • Green/Clean tech. In the race to cut carbon emissions, this has become a highly competitive market. New Zealand has produced a number of successes, backed by good partnerships with universities. For example, the MacDiarmid Institute’s partnerships with Avertana, Mint Innovation and Aquafortus. 

  • EdTech. The increase in online learning as a result of the pandemic is driving activity in this area and accelerating adoption. Education Perfect, Totara Learning and Komodo are recent examples.  

Headwinds - the talent shortage 

New Zealand has always been heavily reliant on international talent and border closures have created difficulties for hiring and retention. Technology is particularly affected and we may see this resulting in a slowing of growth strategies. Those with well-networked capital investors will have an advantage where they can help to access additional talent to help drive further development and growth.

The appeal of the gaming sector

Globally, the gaming market is huge and New Zealand companies including KiwiNinja, Grinding Gears, Mytona and RocketWerkz are already making their mark. These companies have shone a light on our market, which has considerable potential to expand. Gaming uses a lot of creative talent - including skills from the film industry.  Investment in these firms has enabled them to continue to scale and expand in New Zealand, increasing high value job opportunities. 

Traditionally, gaming has sat more firmly in the creative sector, but as it incorporates more technology - such as payment systems and cloud platforms - there will be demand for other disciplines.  

As with other tech companies, there is a talent shortage delaying growth. The industry is lobbying for a gaming-dedicated fund and R&D concessions similar to those provided to the film industry here and the gaming sector in Australia.

International investors find world-class IP in NZ that can be quickly scaled into global markets.

New Zealand is building a strong reputation as a market for Software as a Service for SMEs.

Globally, the gaming market is huge and New Zealand companies are making their mark.


Regan Hoult

Partner, Corporate Finance Leader, Auckland, PwC New Zealand

+64 21 243 2378


Rod Harris

Partner, Auckland, PwC New Zealand

+64 22 657 6699


Anand Reddy

Private Business Leader , Auckland, PwC New Zealand

+64 27 592 1394


Exceptional valuation outcomes: what’s driving this recent trend?

Over the past year, the market has experienced a surge in the volume of deal activity as well as a significant increase in valuations achieved.

While valuation multiples fluctuate, and depend on a wide range of factors such as the sector and current macro backdrop, we have observed common attributes across businesses achieving high valuation outcomes. In this article we examine these characteristics, describe the wider macro environment and highlight recent deals with exceptional outcomes. 

 Watch Chris Croft, Director, talk about what's driving exceptional valuation outcomes.

Playback of this video is not currently available


Chris Croft video - MA Update

Attributes driving exceptional outcomes

Clearly outlined growth opportunities. Many New Zealand businesses have not yet capitalised on rapid geographic expansion, leaving this as a tangible growth opportunity area. There is a strong correlation between a company’s growth prospects and multiple achieved. Having a clear growth strategy with evidence of execution ability are critical to investor interest and valuation.

Ability to sell into large markets. Traditionally, Australasian businesses have tended to trade at a discount to international peers, primarily as a result of having a perceived smaller total addressable market. Businesses that have either entered, or are able to easily scale into larger offshore markets (e.g. SaaS businesses) have attracted significantly higher valuation multiples. Natural Pet Food Group (NPFG) and Ziwi are good examples of this. Both entered and demonstrated strong growth in the large North American and China markets.

Premiumisation. Ultra-premium products are increasingly in demand from consumers and the companies that produce them are equally sought after, with particular focus on acquiring existing high profile brands. Examples include Ziwi, Allpress or My Food Bag.

First-rate management teams. Management teams that are able to clearly articulate the USP and vision of the business, and then execute upon the strategy.

Disruptive products or services. A company’s ability to disrupt a traditional industry or model commands a premium multiple. For example, Education Perfect is disrupting the traditional delivery model by using an online model. Both NPFG and Ziwi are disrupting the traditional kibble-based pet food industry.

First mover advantage and defensible positions. Companies with products or services that were first to market or with a market position that is largely unchallenged. My Food Bag had a clear first mover advantage in New Zealand through being the first provider to launch nationwide and becoming a name synonymous with meal kits.

Positive tailwinds in the sector. Businesses operating in sectors driving or benefiting from change, particularly where this has been expedited by COVID-19, accelerating a transition that would have otherwise occurred over many years. For example, Education Perfect and Mighty Ape with the shift in consumer behaviour to online, and Ziwi and NPFG with the increasing humanisation of pets. 

Resilience to COVID-19. Some sectors have demonstrated incredible resilience, or even taken advantage of COVID-19 adversities. Companies with capabilities to respond swiftly to the intricacies of the pandemic with innovative solutions have seen the best results. For example, the technology sector as a whole, with notable spotlight on e-commerce companies and ‘work-from-home’ capability providers. Ninja Kiwi and Education Perfect both fared well during the pandemic. 

ESG aligned. Environmental, social and governance (ESG) considerations are increasingly moving from the periphery of the investment decision framework to a more central role. Investors are seeking companies they feel comfortable investing in long-term, and align with public interest.


Move to digital. Software as a Service (SaaS) and other digitally enabled businesses have attracted premium valuation multiples. This reflects unique IP and large global market opportunities with the ability to scale quickly via a digital business model. Recent examples include Timely, EzyVet, Ninja Kiwi and Education Perfect. We are also seeing more investors using the ‘Rule of 40’ as a screening tool to measure the balance of growth and profitability. This rule states that a company’s combined revenue growth rate and EBITDA margin should exceed 40%.

While valuation is a function of numerous converging factors, and can result in large variances, currently multiples are experiencing extreme highs - ones that some would consider ‘all time highs’. If investors are mulling a potential sale in the near future, there is no better time than now.


Macro trends supporting high valuations

Markets are awash with capital

Globally, markets are awash with capital, particularly private equity (PE) firms with large amounts of dry powder to invest putting upward pressure on valuations. Global monetary policy settings and the resulting low interest rate environment, providing access to cheap debt funding, have helped create an inflationary backdrop for asset prices.

‘Cashed-up’ corporates, bullish private equity firms, the re-emergence of retail investors, growing superannuation funds, and the rise of Special Purpose Acquisition Companies (SPACs) (albeit less relevant for the New Zealand market), have all contributed to a highly competitive landscape for investment. PE dry powder now totals over US$2.3 trillion1, and corporate cash balances are at an all-time high, with cash on the balance sheets of S&P 500 companies at ~US$2 trillion2. This has resulted in companies progressively deleveraging, with the current average D/E ratio of S&P 500 companies at 1.6x vs 2.5x for the corresponding period in 20193, prior to the COVID-19 pandemic. 

The impact of COVID-19

The working from home phenomenon, brought about by the COVID-19-related lockdowns, has increased connectivity around the globe. This has led to New Zealand being more accessible, altering the perception of foreign buyers (particularly American and European) that New Zealand is at the bottom of the world, where it is hard to manage investments and have boots on the ground. We have now completed numerous deals without the buyer setting foot in the country.

Growing international demand

There has been strong offshore demand for New Zealand-based businesses, predicated by the country’s strong fundamentals, such as political and regulatory certainty. Throughout the majority of the pandemic, New Zealand has also been viewed as a ‘safe haven’, driving inbound investments.

Popular sectors

Various factors are causing certain sectors to be particularly ‘hot’ right now; the rise of ESG is turning more investor focus to technology and renewable energy companies, an ageing population has highlighted the increasing need for healthcare providers, and the defensibility of assets is making infrastructure assets another popular choice. 

This momentum in deal activity has created a ‘snowball effect’, with successful acquisitions providing confidence to other business owners seeking solid returns and significant capital gains on the sales of their businesses. With so many high valuation sales in the marketplace, many owners are looking for their ‘slice of the pie’. 

1   S&P Global Market Intelligence, August 2021
2   Reuters, July 2021
3   Capital IQ


Examples of recent deals 

A number of recent transactions represent a step change in the valuations achieved compared to what has been seen historically, with some sectors featuring prominently: 

* denotes deals which PwC advised on.

  • *Education Perfect on its majority sale to the Global Impact fund of KKR & Co.

    • Education Perfect is an online-based education platform, providing teachers and parents with curriculum-aligned content for secondary and primary school students.

  • Seequent on its sale to American firm Bentley Systems. 

    • Seequent develops 3D modelling tools, specialising in modelling ground conditions to service the mining, geology and civil engineering industries in over 100 countries.

  • Vend on its sale to Canadian firm Lightspeed.

    • Vend is a point-of-sale and retail management SaaS provider, allowing retailers to utilise the platform without a cash register. 

  • Timely on its sale to American firm EverCommerce.

    • Timely is a cloud-based SaaS firm, specialising in appointment booking and business management. 

  • ezyVet on its sale to American firm IDEXX Laboratories.

    • ezyVet is a cloud-based company providing SaaS solutions for veterinary professionals, focusing on practice management, servicing over 2,000 hospitals in 18 countries. 

  • Ninja Kiwi on its sale to Swedish company Modern Times Group. 

    • Ninja Kiwi is a mobile and online video game developer.

  • *Mighty Ape on its sale to

    • Mighty Ape is an online retailer, operating online stores in New Zealand and Australia.

  • *My Food Bag’s IPO.

    • My Food Bag is a meal kit home delivery service, delivering ingredients and recipes to New Zealand-based households.

  • *Ziwi’s conditional sale to FountainVest Partners, a Hong Kong based private equity firm.

    • Ziwi produces premium dog and cat food sold under its Ziwi Peak brand, with two of its largest markets being the US and China. 

  • *Natural Pet Food Group (NPFG) on its sale to KKR & Co.

    • NPFG produces premium dog and cat food under the K9 Natural, Feline Natural and Meat Mates brands, with major markets including the US, China, Japan and Australasia.

  • Allpress Espresso on its sale to Asahi Beverages. 

    • Allpress is a coffee roasting company, selling coffee beans, concentrate and iced beverages to cafes,restaurants, and wholesale customers. Operations have expanded to include New Zealand, Australia, Japan, Singapore and the UK.

  • Pacific Radiology Group on its majority sale to Infratil.

    • Pacific Radiology Group is a diagnostic imaging service provider, also providing interventional services.

  • Tilt Renewables on the sale of its New Zealand-based operations to Mercury NZ.

    • Tilt Renewables operates renewable energy generation assets in both Australia and New Zealand. The New Zealand operations include five operating wind farms and further development options.


Murray Schnuriger

National Managing Partner - Markets & Growth, Auckland, PwC New Zealand

+64 21 884 616


Regan Hoult

Partner, Corporate Finance Leader, Auckland, PwC New Zealand

+64 21 243 2378


Chris Croft

Director, PwC New Zealand

+64 21 894 670


How PwC can help

PwC NZ’s Corporate Finance and M&A team is the largest in the country, with a proven track record across a diverse range of sectors. We offer a full range of M&A advisory services including divestments, acquisitions, private equity, capital raisings and strategic relationships. 

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 1 firm for the amount of M&A deals by Thompson Reuters for the last 16 years.

Karl Dwight

Partner, Auckland, PwC New Zealand

+64 21 396 361


Murray Schnuriger

National Managing Partner - Markets & Growth, Auckland, PwC New Zealand

+64 21 884 616


Amy Ellis

ESG Deals Leader, Auckland, PwC New Zealand

+64 21 223 4554


Rod Harris

Partner, Auckland, PwC New Zealand

+64 22 657 6699


Regan Hoult

Partner, Corporate Finance Leader, Auckland, PwC New Zealand

+64 21 243 2378


Richard Longman

Managing Partner, Wellington, Wellington, PwC New Zealand

+64 21 777 780


Wayne Munn

Partner, Canterbury, PwC New Zealand

+64 21 918 289


Craig Armitage

Canterbury Managing Partner and China Business Group Lead, Canterbury, PwC New Zealand

+64 21 616 232


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