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NZ M&A Predictor: Issue 9

NZ M&A Predictor: Issue 9

New Zealand’s M&A market remains resilient, with deal volumes up 14% in the first half of 2016 – while offshore corporate take a conservative stance in light of global uncertainties.

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Local M&A market remains resilient amid global uncertainties

New Zealand companies are continuing to show a healthy appetite for M&A deals – while the rest of the world takes a more conservative stance in response to various global uncertainties.

The October 2016 report showed a ‘business as usual’ approach for M&A in New Zealand; in contrast to large shifts occurring at the macro level. Globally, corporates are have reduced net debt levels, and are a showing a marked slow-down in completion rates of M&A transactions.

Key findings from the October 2016 M&A Predictor:

  • In contrast to large shifts in the global market, New Zealand’s key indicators remain stable. Market confidence has softened slightly (down 3%); while capacity has increased slightly (up 1%).
  • This compares to a 4% drop in confidence globally, and 7% across Asia Pacific. Global capacity has risen 12%, and 19% across Asia Pacific (measured by net debt/EBITDA). Foreign corporates are taking a fairly conservative stance in response to various global events – such as Brexit, the upcoming US election, uncertainty around interest rate rises and sustained pressure on oil prices.
  • Further, we’ve seen a slow-down in the number of deals actually completing offshore – down 14% - consistent with messages we’ve had from our colleagues offshore that many deals are being “parked” or taking longer to achieve a successful outcome.
  • New Zealand deal volumes were up 14% for the first half of 2016. Sustained level of deal activity is a reflection of New Zealand’s robust economic performance, coupled with little activity in the IPO market given sustained market volatility.
  • Strong consumer confidence and retail spend statistics, as well as dairy prices picking up more recently, are all important factors contributing to New Zealand’s GDP growth of 3.5% for the recent June quarter.
  • New Zealand sectors performing particularly well recently include building materials and tourism. This is a reflection of strong fundamentals such as population growth, strong net migration to New Zealand, and of course a very strong residential and non-residential construction pipeline for the next 10 years.

© 2020 KPMG, a New Zealand Partnership and a member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

KPMG International Cooperative (“KPMG International”) is a Swiss entity.  Member firms of the KPMG network of independent firms are affiliated with KPMG International. KPMG International provides no client services. No member firm has any authority to obligate or bind KPMG International or any other member firm vis-à-vis third parties, nor does KPMG International have any such authority to obligate or bind any member firm.

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