Welcome to the Fear and Greed Business Interview. I'm Sean Almer. Them and A market is bounced back in the last year a little, with the highest number of deals recorded in over a decade, and the next twelve months are looking promising. We speak every year at this time to Sandy mac head of corporate at Cause Chambers Westcart when the independent law firm releases it's M and A report. Sandy, welcome back to Fearing Greed.

Welcome to the Fear and Greed Business Interview. I'm Sean Almer. Them and A market is bounced back in the last year a little, with the highest number of deals recorded in over a decade, and the next twelve months are looking promising. We speak every year at this time to Sandy mac head of corporate at Cause Chambers Westcart when the independent law firm releases it's M and A report. Sandy, welcome back to Fearing Greed.

Thank you very much for having me again.

Thank you very much for having me again.

Sean, Why are we seeing more M and A activity and where is it? Look?

Sean, Why are we seeing more M and A activity and where is it? Look?

Our survey is a public M and A survey, so I should be very clear about that because the statistics that we are recording where we have seen the elevated levels of activity have largely been in what we call takeovers in that listed company market, and the sectors in which we have seen this elevated level of activity have been largely in the energy and resource of space and quite a few deals in that tech space as well. Sure that if you were to ask market practitioners across the board whether they felt very very busy throughout all of last year when you're take into account bos public as well as private transactions. It probably wasn't the bumper year that most deal makers would be hoping for, but activity levels were pretty consistent and it was pretty healthy. So I think our prediction for next year is that that will continue and possibly even increase.

Our survey is a public M and A survey, so I should be very clear about that because the statistics that we are recording where we have seen the elevated levels of activity have largely been in what we call takeovers in that listed company market, and the sectors in which we have seen this elevated level of activity have been largely in the energy and resource of space and quite a few deals in that tech space as well. Sure that if you were to ask market practitioners across the board whether they felt very very busy throughout all of last year when you're take into account bos public as well as private transactions. It probably wasn't the bumper year that most deal makers would be hoping for, but activity levels were pretty consistent and it was pretty healthy. So I think our prediction for next year is that that will continue and possibly even increase.

Okay, so we're talking about tech companies and mining resource companies generally, it's pretty much at that lower end, that that smaller end that we're talking like kind of the deals of ten millions and hundreds of millions of dollars as opposed to the billions of.

Okay, so we're talking about tech companies and mining resource companies generally, it's pretty much at that lower end, that that smaller end that we're talking like kind of the deals of ten millions and hundreds of millions of dollars as opposed to the billions of.

Dollars, they were kind of in the hundreds of millions of dollars. Our survey always takes into accounty of twenty five million dollars or more, only we didn't have what we called last year the New Crest effect, where we had one two really big deals to skew the numbers. So this year the values kind of came back to what I see as more normal levels commas. But if you look at the private M and A market, and you look at air Trunk, which is in that tech space, and you include that and the statistics you come back up to really elevate at levels again. So overall, I think it has been busy we have seen some very large transactions and they have been largely concentrated in that energy and resources as well as tech space.

Dollars, they were kind of in the hundreds of millions of dollars. Our survey always takes into accounty of twenty five million dollars or more, only we didn't have what we called last year the New Crest effect, where we had one two really big deals to skew the numbers. So this year the values kind of came back to what I see as more normal levels commas. But if you look at the private M and A market, and you look at air Trunk, which is in that tech space, and you include that and the statistics you come back up to really elevate at levels again. So overall, I think it has been busy we have seen some very large transactions and they have been largely concentrated in that energy and resources as well as tech space.

Okay, so why are we seeing the activity we're seeing at the moment. Is it about people being more used to the macro environment. Is it about boards finding that post COVID, post the world settling down, they've got more cash on their hands. Is it about the opportunity one of the reasons.

Okay, so why are we seeing the activity we're seeing at the moment. Is it about people being more used to the macro environment. Is it about boards finding that post COVID, post the world settling down, they've got more cash on their hands. Is it about the opportunity one of the reasons.

Look, I think people have just decided they cannot sit on their hands any longer to wait, but do you happen? And they've got to go out and do them and make them happen. So we're seeing a lot of companies out there that need to grow in various ways, and that includes through m and A and bolt on acquisitions, and they've decided to come to market. I think interest rates debilizing absolutely does help. What MNA does not like as volatility and uncertainty. And so deal makers are beginning to take their cues from the markets from the US and having observed a degree of stability and inflesh and interest rates, have decided now it's time to get back into the market.

Look, I think people have just decided they cannot sit on their hands any longer to wait, but do you happen? And they've got to go out and do them and make them happen. So we're seeing a lot of companies out there that need to grow in various ways, and that includes through m and A and bolt on acquisitions, and they've decided to come to market. I think interest rates debilizing absolutely does help. What MNA does not like as volatility and uncertainty. And so deal makers are beginning to take their cues from the markets from the US and having observed a degree of stability and inflesh and interest rates, have decided now it's time to get back into the market.

And mostly this has been in the public sector. This has been in the smaller end, do you expect it will flow through to the larger end? Having said that, in recent times we've seen MCRE, the packaging group, make a bid for a US company. Now it's a New York Stock Exchange listed used to be Australians, So I'm not sure how that fits into the whole game plan. But do you think that the flow on from these smaller sort of tens hundreds of millions will reach the top fifty?

And mostly this has been in the public sector. This has been in the smaller end, do you expect it will flow through to the larger end? Having said that, in recent times we've seen MCRE, the packaging group, make a bid for a US company. Now it's a New York Stock Exchange listed used to be Australians, So I'm not sure how that fits into the whole game plan. But do you think that the flow on from these smaller sort of tens hundreds of millions will reach the top fifty?

I do. I think that there is opportunity for some quite large ticket transactions in the coming year, and certainly I think that that is not just in the public listed space, but also in the private M and A space, And we're anecdotically seeing a lot of sales process is coming to market or transactions are quite large transaction values. So my prediction is next year is going to be a very strong lear not just in terms of number of deals, but also in terms of the value of the deeds.

I do. I think that there is opportunity for some quite large ticket transactions in the coming year, and certainly I think that that is not just in the public listed space, but also in the private M and A space, And we're anecdotically seeing a lot of sales process is coming to market or transactions are quite large transaction values. So my prediction is next year is going to be a very strong lear not just in terms of number of deals, but also in terms of the value of the deeds.

So why is that?

So why is that?

Again, I think it's a function of market disciplines, getting more comfortable with the dynamics in the market and need to grow, being able to get the debt funding that they need, and being able to determine where growth opportunities lie. The biggest race that we still have in deal execution is still that delta between buyers and sellers in terms of value. There's still a bit of a gulf, you know, I won't lie like. There's a lot of quite a number of hostile transactions this year in our survey as well. Hostile transactions usually indicate some kind of delta between buyer and sellers views on value, and there was some specific reasons for why some of those deals occurred, but largely speaking, when you can't get agreement or you don't see iti with a target on price, bidders are perpet to go hostile. And that's because they're not willing to sit around and wait for things to happen anymore.

Again, I think it's a function of market disciplines, getting more comfortable with the dynamics in the market and need to grow, being able to get the debt funding that they need, and being able to determine where growth opportunities lie. The biggest race that we still have in deal execution is still that delta between buyers and sellers in terms of value. There's still a bit of a gulf, you know, I won't lie like. There's a lot of quite a number of hostile transactions this year in our survey as well. Hostile transactions usually indicate some kind of delta between buyer and sellers views on value, and there was some specific reasons for why some of those deals occurred, but largely speaking, when you can't get agreement or you don't see iti with a target on price, bidders are perpet to go hostile. And that's because they're not willing to sit around and wait for things to happen anymore.

Okay, I mean they have been in that end of the market. There's been some really long running takeover battles over the past twelve months or so. You mentioned Newcrestle, the new Man Effect before that was an overseas by taking out an Australian company. Are we seeing offshore companies buying local assets like lightwom Obviously that was a big one.

Okay, I mean they have been in that end of the market. There's been some really long running takeover battles over the past twelve months or so. You mentioned Newcrestle, the new Man Effect before that was an overseas by taking out an Australian company. Are we seeing offshore companies buying local assets like lightwom Obviously that was a big one.

Yeah, So we acted for Sangovan the French industrials company that bought CSO and one of one of the trends that we saw this year, if you like, as this number of industrial companies that were taken private, and they include Borl and ad Rye. So we absolutely saw influx of foreign bidders coming back. In our statistics sure that for the first time in about five years, foreign bidders exceeded Australian bidders. Now, a large part of that was during during the COVID period. It was difficult to do deals when you couldn't fly into the country and have a look at the asset to management, et cetera. The kinds of deals that got done by foreign viders in that period were limited, and they were limited to transactions where you already knew the asset. For example, we acted for Coca Cola. You're specific partners who bought AMTIL, so there was a relationship already. This year, what we are seeing is that foreign bidders are coming back in force and they are participating in processes, they are bidding for assets. There is a real exchange rate advantage to be had some jurisdictions as well. But interestingly, the jurisdiction that was most active was actually the ash specific region, which you haven't seen in a long time. In particular, Japan was very active. And it's the outward focus that the Japanese have at the moment on a variety of transactions, including in the tech space. I think that has made the difference.

Yeah, So we acted for Sangovan the French industrials company that bought CSO and one of one of the trends that we saw this year, if you like, as this number of industrial companies that were taken private, and they include Borl and ad Rye. So we absolutely saw influx of foreign bidders coming back. In our statistics sure that for the first time in about five years, foreign bidders exceeded Australian bidders. Now, a large part of that was during during the COVID period. It was difficult to do deals when you couldn't fly into the country and have a look at the asset to management, et cetera. The kinds of deals that got done by foreign viders in that period were limited, and they were limited to transactions where you already knew the asset. For example, we acted for Coca Cola. You're specific partners who bought AMTIL, so there was a relationship already. This year, what we are seeing is that foreign bidders are coming back in force and they are participating in processes, they are bidding for assets. There is a real exchange rate advantage to be had some jurisdictions as well. But interestingly, the jurisdiction that was most active was actually the ash specific region, which you haven't seen in a long time. In particular, Japan was very active. And it's the outward focus that the Japanese have at the moment on a variety of transactions, including in the tech space. I think that has made the difference.

Stay with me, Sandy, We'll be back in a minute. I guess this morning is Sandy Mack of Corporate at Course Chambers westcarth What about the super funds? For years we've been talking about the super funds hoovering up all sorts of assets. Is that still happening? But it sound I mean, it sounds as if they've got some competition in the market at least.

Stay with me, Sandy, We'll be back in a minute. I guess this morning is Sandy Mack of Corporate at Course Chambers westcarth What about the super funds? For years we've been talking about the super funds hoovering up all sorts of assets. Is that still happening? But it sound I mean, it sounds as if they've got some competition in the market at least.

Oh look, they haven't. They haven't featured in a significant way in this year's statistics. But they are still a player that you have to reckon with, if not necessarily as a bidder, then as a major stakeholder in transactions who have the ability to determine the outcome of significant deals. Brookfield Origin was a perfect case in point last year where you know, a superannuation fund took the view that they wanted the asset to remain Listen, they were not prepared to accept a particular price, and increasingly, I think we are going to see not just super funds, but also shareholder activists play a really significant role in the outcomes of an m transaction.

Oh look, they haven't. They haven't featured in a significant way in this year's statistics. But they are still a player that you have to reckon with, if not necessarily as a bidder, then as a major stakeholder in transactions who have the ability to determine the outcome of significant deals. Brookfield Origin was a perfect case in point last year where you know, a superannuation fund took the view that they wanted the asset to remain Listen, they were not prepared to accept a particular price, and increasingly, I think we are going to see not just super funds, but also shareholder activists play a really significant role in the outcomes of an m transaction.

And that's a good thing, isn't it, Sandy.

And that's a good thing, isn't it, Sandy.

Look, I think it's great for transactional opportunities. I think it's a very exciting time. It's probably causing some listed boards a bit of a headache in terms of how they manage a stakeholder base, but overall, I think it makes for a much more dynamic and interesting m ANDA environment.

Look, I think it's great for transactional opportunities. I think it's a very exciting time. It's probably causing some listed boards a bit of a headache in terms of how they manage a stakeholder base, but overall, I think it makes for a much more dynamic and interesting m ANDA environment.

Okay, so the next twelve months or so, you're confident that these deals will keep flowing. What could get in the way of them? And I suppose I'm heading towards a Trump administration or something like that, But what is it that could stop it?

Okay, so the next twelve months or so, you're confident that these deals will keep flowing. What could get in the way of them? And I suppose I'm heading towards a Trump administration or something like that, But what is it that could stop it?

Yes, I'm not a political analyst or commentative.

Yes, I'm not a political analyst or commentative.

Yeah, I appreciate that.

Yeah, I appreciate that.

Take this with a grain of salt. But I again, like I said at the beginning, m ANDA hates uncertainty. So I think the US is back I read a quote somewhere back in the business of doing business. But where I think the handbreaks might come in is if there is if certain policy decisions then impact external factors. For example, Harris geopolitical instability. All of those sorts of things have a knock on effect for other jurisdictions outside of the US. And if that then right leads to rising inflation and again interest rates go up and there is a degree of uncertainty about where we're headed, then I think that's what's likely to slow us down a bit.

Take this with a grain of salt. But I again, like I said at the beginning, m ANDA hates uncertainty. So I think the US is back I read a quote somewhere back in the business of doing business. But where I think the handbreaks might come in is if there is if certain policy decisions then impact external factors. For example, Harris geopolitical instability. All of those sorts of things have a knock on effect for other jurisdictions outside of the US. And if that then right leads to rising inflation and again interest rates go up and there is a degree of uncertainty about where we're headed, then I think that's what's likely to slow us down a bit.

Are there any sectors that you think are likely to be busier than others?

Are there any sectors that you think are likely to be busier than others?

I think that energy transition sector is going to continue really strongly. We think that lithium's probably sort of come off the boil a little bit. We saw quite a few lithium transactions last year, and this year we did at Fort Azure on the takeover by SQM and Hancock, But I'm not sure that those transactions are going to continue war anymore, just because of lithium pricing. We think we'll see more consolidation in gold, just in terms of growth and synergies, and possibly also copper, but very much. You know, anything that is adjacent to energy transition will continue as an act sector, and I think tech will continue. I am hopeful that healthcare is going to come back as well, because it's a particular passion of mine. I have hope that it might come up again strongly this year, and we haven't seen that play out quite in the same way, but I understand that there are a bunch of private processes in the background and you might get to see a little bit more activity in that sector in the private space.

I think that energy transition sector is going to continue really strongly. We think that lithium's probably sort of come off the boil a little bit. We saw quite a few lithium transactions last year, and this year we did at Fort Azure on the takeover by SQM and Hancock, But I'm not sure that those transactions are going to continue war anymore, just because of lithium pricing. We think we'll see more consolidation in gold, just in terms of growth and synergies, and possibly also copper, but very much. You know, anything that is adjacent to energy transition will continue as an act sector, and I think tech will continue. I am hopeful that healthcare is going to come back as well, because it's a particular passion of mine. I have hope that it might come up again strongly this year, and we haven't seen that play out quite in the same way, but I understand that there are a bunch of private processes in the background and you might get to see a little bit more activity in that sector in the private space.

One final question, which is a little bit left field. We talk about deals all the time, you know, script offers and cash plus shares. Are they more complex now than they used to be or not?

One final question, which is a little bit left field. We talk about deals all the time, you know, script offers and cash plus shares. Are they more complex now than they used to be or not?

I think they are more complex, and I think it is again when you have the delta between buyers and cellars in terms of value, you've got to find a way of bridging value and to do that you use more complex structures and more innovative sort of thinking around consideration and what you can offer to share all this. So yeah, overall, I think that's a bit more complexity, which makes it more fun for us, and it does.

I think they are more complex, and I think it is again when you have the delta between buyers and cellars in terms of value, you've got to find a way of bridging value and to do that you use more complex structures and more innovative sort of thinking around consideration and what you can offer to share all this. So yeah, overall, I think that's a bit more complexity, which makes it more fun for us, and it does.

Sandy, thank you for talking to Fear and Green.

Sandy, thank you for talking to Fear and Green.

Thank you very much.

Thank you very much.

John. That was Sandy mac, head of corporate at Cause Chambers Westcalf This is a Fear and Greed business interview. Join us every morning for the full episode of fear and greed. Daily business news for people who make their own decisions. I'm Sean alma Enjoy your day.

John. That was Sandy mac, head of corporate at Cause Chambers Westcalf This is a Fear and Greed business interview. Join us every morning for the full episode of fear and greed. Daily business news for people who make their own decisions. I'm Sean alma Enjoy your day.