PWC (formerly PriceWaterhouseCoopers) say there has been an increase in mergers and acquisitions in the first quarter of this year. Photo: RNZ / Nate McKinnon
There has been a 20 percent increase in first quarter merger and acquisition (M&A) activity, which is expected to remain strong, with plenty of buyers in the market.
Professional services provider PWC said 54 companies changed hands in the first quarter (Q1) compared with 45 deals the year earlier, with trade buyers looking to expand their businesses, accounting for about three-quarters or 40 of the transactions (74 percent).
The number of domestic buyers dropped slightly in Q1 with 27 deals, compared with 35 deals in the fourth quarter ended December.
Financial services had been the most active sector since Q3 2022, however technology, media and telecommunications ranked as the most active sector since Q2 2022, followed by the consumer sector.
PWC partner and corporate finance leader Regan Hoult said there was a good deal of activity across multiple sectors, with most deals valued in a mid-range of between $50m and $300 million.
Among the bigger named trade deals was Restaurant Brands' purchase of the KFC outlet inside the Auckland Airport international terminal, Distinction Hotels buying the Mount Cook Hotel Collection and DB Breweries buying the balance of shares it did not already own in Joylab and then merging Joylab with Kāpura to create Star Hospitality.
Hoult said values held up well despite a challenging macro economic environment.
"We think that the macro economic conditions continued to stabilise, with the recent rapid (interest) rates increases and inflation, starting to get more of a handle across supply chain challenges . . . and we're seeing a lot of private equity and financial investors with record levels of capital to invest and looking for opportunities," he said.
"So we think that over the following quarters, we'll continue to see strong activity."
However, Hoult said investors were spending more time evaluating prospects through the due diligence process, amid an exception there were likely to be more distressed assets given current economic conditions.
"We're probably starting to see a little bit of that coming through, as clearly the headwinds of significantly rising interest rates and inflationary costs, and perhaps banks, looking to take action where companies are not performing or meeting expectations."