Doing deals in uncertain times

I originally wrote this article near the end of 2025 and was expecting a full rewrite would be required given recent events. However, I thought it would be interesting (and efficient!) to publish the main body of the article unedited, other than this introductory wrap. The vast majority of the below continues to be relevant for the Australian market and if anything differs, it would be:

1.     The pipeline of M&A activity in Australia and the sentiment around it is stronger than anticipated; and

2.     Notwithstanding Australia facing rising fuel prices, stubborn and increasing inflation and cost of living pressures, from an investment standpoint, we expect the “Lucky Country” may again be viewed as an “island of reliability” and attract more than its share of capital for its relative “safe haven” status.

From here, my unedited article penned in October 2025.

We believe the safest assumption at this point for 2026 Australian M&A outlook is to expect more of the same. The capacity for activity remains strong with a significant volume of dry powder, but the market does not have a stable platform for conviction. Sentiment and more fundamental market dynamics can flip (materially) on a dime and geopolitical risk, and tensions remain elevated.

Against this backdrop, while unlikely to transparently proffer this perspective, we believe some investors view not making a decision as a lower risk proposition than the alternative. Therefore, where an opportunity to ‘kick the can down the road’ presents itself, many may seize the opportunity. Board inertia will continue, and we should expect transaction timelines, both preparation and execution, to continue taking longer than normal.

Transactions that do come to market are likely to comprise a heavy weighting of investments that are; (1) beyond preferred investment hold periods (2) previously marketed unsuccessfully (3) opportunistic trades (4) all of the above – Investors will not be rushing to bring deals to market ahead of their natural exits. Some opportunistic trades will want to move quickly, but market reality will likely dictate that these also take longer due to risk appetite, resulting due diligence requirements and the piano accordion-like movement of bid-ask valuation spreads. Where a credible bidder with compelling interest is engaged, the case for bilateral engagement is strong.

We will still see some large marquee trades but on a relative basis, we expect less of these than may be typical. Due to this dynamic, whether our respective businesses secure roles on the marquee trades may be the difference between having a satisfactory year or a great year. In Australia, the trades we’d put in this category from the past 12-18 months are Airtrunk, Zenith and Kinetic.

From a current business management perspective, our view is that it pays to back yourself in managing a larger portfolio of transactions at differing stages of their M&A transaction life cycle. To do this successfully, laser focus and discipline in managing client demands and juggling competing priorities is required. Executing transactions in a hot market is radically different to doing deals in a more challenging environment. However, there are a clear set of Groundhog Day process themes and lessons that are evident.

1. Identify and understand your audience
   1. Engage with the investor market both early and throughout
   2. Understand their interest, what matters to them, how they’re placed from a fund and timing perspective
   3. Have a deep understanding and genuine insight into what makes each individual investor tick. It may make the difference in winning any advisor beauty parade and is critical in designing the optimal process.
   4. Where possible, facilitating select, early access to management can be very additive for a sales process
       
2. Thoughtful, tailored process design is more crucial than ever
   1. Consider the investors and market in your process design - investors don’t need any encouragement to put things in the “too hard” basket
   2. Do the early work and war gaming to understand the optimal process design
   3. Once formed, be prepared to put your view forward assertively and defend it vigorously (with diplomacy of course). While ultimately their call, clients require solid advice now more than ever and the risk of them not seeing a path that is in their best interests or not being fully appreciative of the downside risk is heightened. The best-case outcome in getting the process design call wrong is that the deal still happens but it costs time and money. In the worst cases, it kills (and taints) the deal.
       
3. Time kills deals
   1. This has always been the case, but never truer than now
       
4. A bird in the hand…
   1. Similarly, this is at a significant premium in the current market
       
5. Don’t be scared of a bilateral, but do be paranoid
   1. Find the contingency options and points of leverage
   2. Develop a framework to drive the timetable
   3. Somewhat counter intuitively, it can be possible to secure a better value outcome via a bilateral than an auction. Some fund investors are happy to pay a premium for deal certainty.
       

Ultimately, in a market that looks as if it is going to bring more of the same uncertainty we saw over the last couple of years, we should focus on what we can control rather than what we can’t. What we can control is how we approach the deal, how we market, plan and execute. The only thing for sure is that the remainder of 2026 is going to deliver a whole new set of international plot twists, as it has already, with surprising head winds and super villains for us all to deal with.