Record Levels Of M&A Activity Continue In Q3 2021

Positive macroeconomic conditions, markets awash with capital and the re-emergence of deals put on hold throughout 2020 are continuing to drive record levels of deal activity in New Zealand.

Today, PwC New Zealand has launched the latest edition of its M&A Quarterly Update exploring the key trends in merger and acquisition (M&A) activity across New Zealand in July - September 2021.

Analysis by PwC reveals a continuation of the record levels of deal activity seen earlier in the year:

Quarter 3 saw 54 deals announced or completed - an increase from the record 47 deals completed in Quarter 2 of 2021.

Deal activity was driven by local buyers: 68% of deals completed or announced involved locally-based buyers. This continues the second quarter trend of heightened local activity in comparison to previous years.

International cross-border M&A activity has remained strong, with 17 cross-border deals announced and almost half of that activity coming from Australia. This activity is well ahead of 2020 pandemic levels and slightly ahead of 2019 levels.

Technology, Media, Telecoms (TMT) has again dominated the industry sector deals during the third quarter, although pharma, medical and biotech activity was also strong.

PwC New Zealand Partner and Corporate Finance Leader Regan Hoult says, “The low interest rate environment globally has led to reduced cost of capital and higher valuations. This combined with record levels of capital looking for investment has helped drive M&A activity”.

“We’re seeing deals that were put on hold throughout 2020 coming back to market. We’re also seeing heightened M&A interest from private business owners considering their liquidity options, often as a result of unsolicited approaches from potential investors.”

The technology sector remains the busiest for M&A activity in New Zealand and these deals can bring great benefits to local companies and the wider New Zealand tech ecosystem.

“Accelerated global expansion and the growth opportunities this brings can be beyond the resources and capability of local companies. Partnering or selling to an offshore investor with the requisite capabilities can provide access to governance, networks and management professionals that will enable a company to continue to scale at the next level. Freeing up capital (and time) for the founders that is then often re-deployed in supporting other New Zealand tech businesses is another flow on benefit.”

Another key trend is the rise of exceptional valuation outcomes for deals.

“While valuation is a function of numerous converging factors, and can result in large variances depending on each unique circumstance, valuation multiples are currently at an all time high. If investors are mulling a potential sale in the near future, there is no better time than now.”

This analysis forms the basis of the second edition of M&A Quarterly Update, a quarterly publication from PwC New Zealand. More information can be found here.

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