Top 10 Australian M&A Predictions for 2025

Merger reforms loom large

With the Government’s merger reforms recently passing Parliament, will there be a wave of deals announced in early 2025 to beat the 1 January 2026 start date? Will parties voluntarily use the procedure from 1 July 2025? We don’t think merger reform will cause some abnormally high level of early 2025 deals, but sophisticated players are already factoring the new regime into their M&A thinking.

The Australian boardroom will drive M&A

The ongoing assessment of the asset portfolios of a number of ASX-listed companies will help drive 2025 M&A volumes. Many boards will continue to contemplate their strategies and consider the need to simplify or to grow, in each case keeping their M&A teams (and advisers) busy. 2025 will be year to execute on those plans, a number of which have been brewing for some time. Private capital / private equity players remain ready, willing and able to jump in and snap-up unwanted quality asset portfolios (particularly those with strong cash flows).

Private Capital / Private Equity

This generally named prediction gets a run again in 2025, after featuring in 2024’s edition. With a title this general, we can always claim it came true! Where do we see things for 2025? At the risk of sounding like lawyers, “It depends”. For private equity, we see a preparedness on one or two occasions to see if the IPO market can provide a path to exit. Much of the dearth of IPO’s in recent times has to do with rational logic, but a part of it as well has to do with momentum (or lack of it to date) and one or two floats getting away to exorcise the demons of floats that didn’t go well for investors. That in turn can help drive M&A sale processes: even the possibility of an alternate exit path can give confidence and drive competitive pressures as well. Watch out too for one or two significant P2P deals for PE houses. For private capital, we think sovereign and super funds will be big players on the 2025 M&A scene.

A return to simpler deal structures

What deal structures will rule OK after 2025? In listed M&A, we predict a return to simpler structures with a focus on core aspects of listed M&A: owning shares and paying enough to force board engagement. The exit world might get a little more interesting (see prediction #5 above) and we’ll add some demergers into the mix as well.

Sectors to watch: Energy, Tech and Financial Services

A couple more sectors and we’d have covered the whole economy! But the ongoing energy transition and the thirst for tech, especially from foreign buyers, will see those two sectors being very active. Financial services has also been a bit of a sleeper, but we think that various drivers (such as portfolio refinement, acquiring adjacent skills and adapting to regulatory change) could see that sector with a very respectable scorecard by this time next year.

Don't forget about me: FIRB and ASIC

We think the ACCC will be the gold medallist regulator in 2025, in terms of being most-prominent and in the news. A new merger regime will do that. But don’t forget about FIRB and ASIC.

FIRB will continue to reflect on its processes and procedures. Some changes have been helpful. We predict some further engagement with the market to see where there are relatively easy gives for FIRB on deals that are not sensitive. FIRB has recently actively investigated potential breaches of the foreign investment laws in the case of ASX-listed mineral companies. We expect to see FIRB undertaking more of these investigations: although not all of these will become matters of public record.

ASIC will also continue to make its mark, with interventions on deals and issues close to its heart. 2024 saw ASIC give a degree of focus to independent experts. It will be interesting to see to what level its planned peek into the world of private capital turns into anything more.

More activists and more free advice!

2024 has seen no shortage of investors and activists offering free advice to boards on what to sell, what to buy, what not to sell or buy, and how to do it. And at what price! This is just part of the M&A landscape and we are never going to back on this one. 2025 will see activists continue to state their cases privately and publicly. Boards, as always, need to be surefooted, and doing all the other things you need to do to manage that landscape.

Somethings that no one will predict will surprise us

Even oracles can’t foresee everything. We challenged ourselves with the question “What is it that we haven’t thought about?” Two predictions – there will be one regulatory proposal from left field that will fit the bill. While not the biggest thing since the adoption of the takeovers code in the 1970’s, the Government’s proposed reforms to the takeover regime in relation to disclosure of derivative interests and tracing notices were surprising and, in the view of many, unnecessary. Watch out for something wild and crazy that no one predicted in 2025! Our other prediction is a mega-deal (and we don’t use that phrase lightly). The advisers who have made it this far into our predictions momentarily go silent: “What is it? Am I on it?”. Time alone will tell.