Mergers and acquisitions down but buyers are willing to pay more, says latest Dealtracker report

Merger-and-acquisition (M&A) activity in Australia has continued to fall from the highs achieved in 2021-22, but overseas buyers have become more active and willing to pay more for their targets, according to research from accounting and consultancy firm Grant Thornton.

The latest edition of Grant Thornton’s Dealtracker report, which analyses all the deals undertaken in Australia over 18 months to the end of December last year, reveals that smaller merger and acquisition (M&A) targets have dominated the deals by number with buyers mostly interested in businesses worth $100 million or less.

The number of deals identified by the 2025 Dealtracker report fell marginally by 118 to 1,591 compared with the previous period, although activity remains among the highest in the past decade.

“Deal volume deteriorated in the final quarter of 2024, which comprised 15 per cent of total deals for the period, with the volume of deals being 14 per cent lower than the same quarter of 2023,” says the report which is now in its 10th year.

“The reduced deal activity throughout the CY2024 period is aligned with ongoing weakening and economic volatility of the global economy, driven by political uncertainty, trade tensions, cost-of-living and inflationary pressures, and continued geopolitical issues.”

However, the price buyers are willing to pay to secure acquisitions has risen with Dealtracker 2025 finding the median deal has been struck on an EBITDA multiple of 8.3x, which is above the long-term average of 8.1x and up from the previous report’s median of 8.0x.

The median trailing EBITDA multiples for businesses with less than $20 million in revenue is 7x, compared to 7.2x in the prior period, although this is higher than the long-term average of 6.1x for deals of this size.

Overseas buyers stepped up their interest in Australian businesses, accounting for 36 per cent of total transactions, up from 31 per cent in the prior period.

The US and Canada led Australian acquisitions, followed by European and Asia-Pacific buyers. The buyers from the US and Canada accounted for 245 deals or 43 per cent of the total, while those from Europe secured 211 deals or 37 per cent of the total.

The presence of Asia-Pacific buyers increased over the period, after securing 17 per cent of the deals by number.

The 2025 Dealtracker covers transactions over the 18 months from 1 July 2023 to 31 December 2024, with the survey limited to going-concern business sales, excluding those with a significant real estate nature.

“While inbound deals faced headwinds in terms of increased regulatory scrutiny, the stabilisation of the Australian economy and political environment over the period coupled with a lower Australian dollar encouraged resilience in international investment,” says the report.

Investment managers lift activity

Investment managers were among the more active purchasers in the past 18 months, with the number of M&A transactions almost doubling from 85 to 158. Crescent Capital Partners was the most active investment manager with 11 deals sealed during the period.

“Investment managers (IM) had been sitting on a substantial amount of capital over the last few years off the back of successful fundraising activity and exits, and following the caution observed in 2022 and 2023, commenced actively deploying that capital,” says the report.

“We expect strong IM activity to continue as there is further capital to deploy, however we expect the slowdown in exits to revert as investments acquired over the last few periods will reach their maturity.”

The industrials sector led the pack for M&A activity, accounting for 31 per cent of deals during the period, with investors mostly interested in niche services to support traditional, asset-heavy industries.

The IT sector came a close second at 22 per cent of total deal flow and the same volume since the prior Dealtracker period to June 2023. The report sees IT as a continued target for M&A activity due to its critical role in driving business competitiveness and growth.

The top two deals identified by the 2025 Dealtracker report were the $26.2 billion takeover of Newcrest Mining by Newmont Corporation, and Blackstone’s $24 billion acquisition of data centre group AirTrunk.

UK-based veterinary service provider CVS Group Plc topped the deals list by number after securing 11 buyouts of veterinary practices in Australia over the period.

“We expect deals to soften in the short term due to continued market uncertainty and global economic volatility, and expect deals to continue to stabilise in the next 12 months,” says Jannaya James, corporate finance partner at Grant Thornton Australia.

“We know there’s still IM capital available to be deployed, albeit cautiously, as IMs are invested in quality growth opportunities. We’re however unlikely to see a return to the levels of IPOs observed historically, due to the current volatility in the markets.”

Notably, the Dealtracker report reveals that capital raising activity slumped over the last 18 months, down 60 per cent compared to the previous period even though the total capital raised increased 9 per cent to $37.7 billion.

“The uncertainty in the markets has resulted in quality over quantity, with companies only seeking to raise capital on the equity markets for more substantial raises,” says the report.

However, the report says market confidence was restored after the $335 million capital raise by Mexican restaurant chain Guzman y Gomez (ASX: GYG) in June last year after the company’s $22 shares closed their first day at $30 and hit a high of $42 by the end of September.

This led to a burst of IPO activity in the second half of last year in which $784 million in capital was raised through primary and secondary raises.

The Grant Thornton report has forecast a softening of deals in the short term due to market uncertainty and volatility in global markets, although it expects this to stabilise over the next 12 months.

“There is still capital available to be deployed and we expect IMs to continue to invest cautiously in quality growth opportunities,” says the report.

“While IPOs may rebound, the current volatility in the markets may delay any recovery and it is unlikely to see the levels observed historically in the near future.”