13th March 2014
Market confidence on the rise as Kiwi firms engage in positive Merger & Acquisition (M) deals
The current merger and acquisitions climate is seeing plenty of ‘positive’ deals to drive company growth and expansion,
according to KPMG New Zealand’s latest M Predictor.
The good news story for New Zealand continues – with the latest M Predictor figures showing both rising capacity and confidence.
Tony McNaught, KPMG NZ’s Head of Mergers and Acquisitions, says the market is active and buoyant.
“The kind of deals we’re now seeing in the marketplace can be characterised as positive deals. Companies are making
proactive, growth-based decisions – they’re seeking out opportunities for enhanced earnings and performance.”
This is a very different picture from the M climate a few years ago, says McNaught.
“We’re seeing fewer deals being done because the banks have stepped in, or because poor profitability has left firms
cash-strapped. It’s certainly a different beat from the more negative drivers for M activity we have seen over the last few years.”
The future climate has different implications for business owners, depending whether they are looking to acquire or
divest.
“For business owners who are thinking of selling, this latest M Predictor indicates there are currently a healthy number of buyers in the market,” explains McNaught.
“On the other side, if you’re looking to grow by acquisition, you’re going to have a decent amount of competition. And
based on the latest forward multiples, the price you’re likely to pay is on the rise.”
• The outlook for M activity in New Zealand remains ‘very positive’ for the next 12 months.
• Market confidence is up 12% since June 2013, with capacity expected to be up 8% by December 2014.
• Confidence levels across the Asia Pacific region, including Australia and China, have increased markedly since
mid 2013.
• New Zealand’s Initial Public Offering (IPO) activity during 2013 was at a 10-year high, with 10 new listings.
IPO activity during 2014 is also expected to be strong.
About KPMG’s M Predictor
The Predictor is a forward-looking tool, published every six months, that helps our clients consider trends and expectations in
merger and acquisition (M) activity. By tracking important analyst indicators up to 12 months forward, it examines the appetite and capacity for
M deals. The rise or fall of forward price to earnings (P/E) ratios offers a good guide to overall market confidence,
while net debt to EBITDA (earnings before tax, depreciation and amortisation) ratios help gauge the capacity of NZ firms
to fund future acquisitions.
KMPG International also releases a Global M Predictor twice a year which provides a similar analysis by sector and country across the globe.
About KPMG New Zealand
KPMG is focused on fuelling New Zealand’s prosperity. We believe by helping New Zealand’s enterprises succeed, the
public sector do better and our communities grow, that our country will succeed and prosper.
KPMG is one of New Zealand’s leading professional services firms, specialising in Audit, Tax and Advisory services. We
have 825 professionals who work with a wide range of New Zealand enterprises – from privately owned businesses, to
publicly listed companies, government organisations, and not-for-profit bodies. We have offices in Auckland, Wellington,
Christchurch, Hamilton, Tauranga and Timaru.
Globally, KPMG operates in 155 countries; employing more than 155,000 people in member firms around the world. The
independent member firms of the KPMG network are affiliated with KPMG International Cooperative (”KPMG International”),
a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
ENDS