After a quiet 2009 on the mergers and acquisitions front in New Zealand, KPMG is predicting an increased appetite over the next 12 months as more certainty enters global financial markets.According to the latest KPMG Global M&A Predictor showed that g
After a quiet 2009 on the mergers and acquisitions front in New Zealand, KPMG is predicting an increased appetite over the next 12 months as more certainty enters global financial markets.
According to the latest KPMG Global M&A Predictor showed that global forward private equity ratios were now 7% higher than last year, while net debt to ebitda ratios were expected to decline by 18%.
The KPMG report - which forecasts corporate deal-making appetite by annually comparing forward private equity ratios and corporate deal-making capacity by comparing forecast net debt to ebitda ratios with current levels – does not include local results, but KPMG NZ corporate finance partner Tony McNaught said New Zealand was likely to follow the global trend.
“With the number of M&A deals down 20% in New Zealand in 2009, it’s not surprising that there is a greater appetite out there now.”
He told NBR KPMG was working on two major deals which did not go through in 2009, but were now looking more likely in 2010.
“There was the case of a large New Zealand-owned private company that pulled out of a deal over a year ago because the timing wasn’t right and forecasts at the time were so unreliable. But they are now talking again 15 months later because they have more confidence in the forecasts and therefore their own values.
“There has also been a lot of improvement on the debt to ebitda measure, with one large client that was looking at logical buyers last year, but held off. Now their gearing has come down, they’ve sold off non-core assets and created a better debt to ebitda ratio, making any deal a lot more likely.”
Mr McNaught said there was no overnight change in attitudes towards mergers and acquisitions, just a long, slow crawl towards confidence.
“There were so many variables at both local and international levels 12 to 15 months ago, but every month that has gone by has seen certainty rise, and that’s driving busineses to make more confident forecasts.”
He said because New Zealand businesses have operated in the recessionary environment over the last 12 months, they now had a better understanding of how businesses were faring in the post-recessionary economy.
The latest global predictor found that Latin America had the highest increases in private equity ratios, followed by Asis Pacific, Africa & the Middle East and Europe.
