M&A activity up as financing tightens

cent/wealth-management-business/axa-asia-pacific/ANZ/

13 November 2009
| By Jayson Forrest |
image
image
expand image

There is growing confidence about global mergers and acquisitions (M&A) over the next 12 months, with an estimated 33 per cent of businesses likely or highly likely to acquire other companies.

This was one of the key findings to emerge from an Ernst & Young survey of 500 senior executives from around the world.

The survey, entitled Why capital matters - building competitive advantage in uncertain times, also found that 63 per cent of respondents were expecting to see an acceleration of industry consolidation in the next 12 months, while 61 per cent expected the current market downturn to reveal the standout companies that are capable of exploiting acquisition opportunities.

"In the coming months, there is likely to be an increase in M&A activity as companies dispose of non-core, underperforming or distressed assets," said Ernst & Young global vice-chair, Transaction Advisory Services, Pip McCrostie. "Those in a position to buy will have the opportunity to capture market share and grow revenues in ways that were impossible two years ago."

Closer to home, we are already seeing that happen with ANZ's recent acquisition of ING's wealth management business, NAB's purchase of Aviva Australia, Westpac picking up St George and AMP's bid for AXA Asia Pacific.

But while respondents reported a rise in M&A confidence levels, the survey also found that 70 per cent of companies remained cautious about global economic recovery and believed that the broader economic malaise will continue beyond the next 12 months. And of that number, 40 per cent thought it would continue for more than two years.

Furthermore, in what could put a dampener on future M&A activity, 53 per cent of respondents believed that financing conditions would not return to mid-2007 levels for at least another three years - with 19 per cent saying it will be over five years or it may never return to that level.

"In 2010, finance will continue to be very difficult to secure. New options will need to be explored - from joint ventures to IPOs," McCrostie said. "In this complex and uncertain environment, a strong capital agenda will be central to boardroom planning and strategy. Leading businesses recognise the ability to respond quickly as the market changes."

Read more about:

AUTHOR

Recommended for you

sub-bgsidebar subscription

Never miss the latest news and developments in wealth management industry

MARKET INSIGHTS

So we are now underwriting criminal scams?...

2 months ago

Glad to see the back of you Steve. You made financial more expensive, not more affordable as you claim, and presided ...

2 months ago

Completely agree Peter. The definition of 'significant change is circumstances relevant to the scope of the advice' is s...

4 months ago

A Sydney financial adviser has been permanently banned from providing any financial services, with the regulator deriding his “lack of integrity, trustworthiness and prof...

3 weeks ago

Minister for Financial Services, Stephen Jones, has provided further information about the second tranche of the Delivering Better Financial Outcomes (DBFO) reforms....

1 week 6 days ago

One licensee has lost 27 advisers in the past week, now sitting at zero, according to the latest Wealth Data figures....

3 weeks ago

TOP PERFORMING FUNDS