Key Takeaways from the Mergermarket M&A Forum Australia 2024

The Mergermarket M&A Forum Australia successfully took place in Sydney and online on 15 October. The event brought together over 535 private market professionals including 140+ corporates representing 275+ different organizations from 17 geographies.

The conference, which focused on of the latest trends and opportunities available for those pursuing Australian M&A amidst ongoing geopolitical, economic and regulatory challenge included keynote sessions featuring Danny Hunt and Roger Newby. Read the key takeaways from their sessions below, and click here to watch the full recordings.

M&A Drivers: The rise of activist investors

• Current Landscape: Investor activism in Australia is on the rise, with significant dissatisfaction in governance and performance, resulting in increased opposition to boards and remuneration reports.
• Activism Trends: In 2023, 53 ASX companies faced public activist campaigns, highlighting ongoing shareholder engagement despite a slight decrease from previous years. Notably, 48% of these efforts focused on board composition, while ESG issues are becoming more prominent.
• Investment Strategies: Successful investment strategies prioritize identifying quality businesses with potential for value creation, often through recognizing suboptimal corporate structures.
• Role of Proxy Advisors: Key proxy advisors (ISS, Glass Lewis, Ownership Matters, ACSI) significantly influence shareholder decisions, especially in the ASX 300. Their recommendations are crucial due to the rise of passive investors, who have historically relied on these advisors for guidance.
• Challenges for Public Company Boards: Boards face increased compliance demands, personal risk, and public scrutiny, leading to conservative decision-making. This environment creates opportunities for activist investors to influence change.
• Engagement with Shareholders: Companies should actively engage with shareholders, especially activist investors, as ignoring their input can lead to negative outcomes. Constructive dialogue is essential for fostering better relationships and driving corporate value.
• Collaboration and Competition: The landscape of activism is becoming more competitive, with local fund managers gaining traction and potential global players entering the market. Successful engagements often begin as private discussions aimed at resolving issues before escalating to public confrontations.
• Sector-Specific Focus: Increased activism is anticipated in the resources sector due to attractive valuations and potential for unlocking shareholder value.

Brave news world: The impact of social media and news on M&A

• Preparation is Critical: A strong leak mitigation strategy can prevent and manage leaks more effectively, especially within the first 24 hours when the response can shape public perception.
• Systems and processes: Confidentiality agreements and clear communication protocols are essential to reducing leak risk and ensuring companies adhere to their continuous disclosure obligations.
• Crisis Management in M&A: A well-prepared crisis management plan is vital for responding to leaks and mitigating reputational damage. Rebuilding trust post-leak is a key challenge for companies.
• Media's Role: Traditional media, rather than social media, remains the primary platform for leaks in Australian M&A. Strategic media engagement can help control narratives post-leak.
• Digital Engagement: Increasing use of digital platforms, including LinkedIn and video communications, offers companies new ways to engage stakeholders and shape the narrative around deals.