More caution seen in company deal-making

Company deal activity fell sharply in the first three months of the year, as firms exercised more caution amid a weaker economic backdrop.

The latest data from consultancy PwC shows there were 26 mergers and acquisitions (M&A) in the March quarter, down from 46 in the same period a year ago, and 50 in the final quarter of last year.

Financial services was the busiest sector, taking up more than a third of deals, followed by telecommunications, media and technology, and business services.

PwC corporate finance leader Regan Hoult said buyers were taking longer to feel confident about a deal.

“I think the general macro[economic] environment has definitely weighed on transactions,” he said.

“And M&A does need confidence from buyers to come in and undertake a transaction.”

Hoult said the uncertain interest rate environment and higher inflation, which came following the Covid pandemic, added to the uncertainty.

Trade investors accounted for 92 percent of the deals, up from 75 percent, with private equity investors remaining quiet, PwC said.

It said 58 percent of the deals involved domestic buyers, compared to 46 percent in the fourth quarter of 2023.

PwC said sectors reliant on consumer spending, such as hospitality, saw weak M&A activity.

Despite a softer quarter, Hoult said healthcare was a sector with a strong outlook.

He said telecommunications, media and technology would also likely continue to attract strong interest.

“Deals are more driven by [intellectual property]… which can be scaled offshore,” he said.

According to the news on Radio New Zealand

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