Dealmakers ever-bullish but eyes to stay on interest rates, Deloitte survey finds

Deloitte is taking the warm investor welcome to Guzman Y Gomez’s initial public offering and a belief that interest rates could be cooling as positive bellwethers for Australian dealmaking.

The Big Four consultant’s mergers and acquisitions lead Ian Turner said the survey of dealmakers from 130 firms painted a surprisingly bullish picture after a “choppy 12 months”.

“While even the most optimistic M&A leader would stop short of predicting a dramatic surge in deals, there are strong signs activity will soon pick up. The recent Guzman y Gomez IPO is a great example of the confidence in the market.” he said.

He suggested that more certainty about where Australia’s interest rate cycle was sitting would mean more “normality” after 12 months of cash rate hikes with no sign of light at the end of the tunnel.

But rates will continue to play a big part in deals going forward, according to Deloitte’s M&A program leader Jamie Irving.

“The M&A outlook remains resilient,” he said.

“Eyes will certainly be fixed on interest rates. Cheaper capital will motivate both buyers and sellers to pursue more deals.”

Of those surveyed by Deloitte, 76 per cent believed economic conditions supported deal activity compared with 66 per cent in 2023. And 53 per cent think there will be more deals in the next 12 months, up from 45 per cent in 2023.

“They are largely confident conditions will strengthen, and are willing to move when they do,” Mr Irving said.

Holding back deals was a lack of sellers in the market, Mr Irving said, and he expected defensive M&A strategies would be “front of mind” for the rest of the year.

About 79 per cent of M&A leaders said they were interested in acquisitions, rather than partnerships at 47 per cent, or selling “non-core” assets at 33 per cent.

“Early movers could reap big rewards, as those who have completed the right deals before competition heats could maximise their advantage.”