DealMakers: Private M&A Report Australia 2025

Market momentum: Q4 in 2024, and December in particular, marked a peak in deal activity, with a notable concentration of high-value transactions. There was a prominent return of billion-dollar transactions, signalling renewed confidence at the top end of the market. Sellers of large assets capitalised on the window of market optimism in the last quarter of the year.

Sector focus: Healthcare, commercial services, education, financial services, and IT led the way—accounting for the majority of deal volume and value. These sectors remain core areas of interest for private capital

Deal dynamics: Bilateral processes dominated 2024. Sellers are being more tactical on bidder engagement, testing appetite with individual prospective buyers and moving quickly to bilateral deals for speed, instead of launching straight into a broad auction. However, competitive auctions—though fewer—captured a significant share of deal value, as bidder demand for large investment opportunities provided support for hotly contested auctions.

Private capital trends: Financial sponsors were more active as buyers than sellers, with a growing appetite for carve-outs and secondary transactions between private capital managers. Deep fields of private capital bidders emerged in the larger sale processes of the year. The fact Financial Sponsors continued to actively deploy and were willing to hold their investment signals optimism for improved conditions.  Sponsor exits will rise as fund cycles mature and market conditions stabilise.

Consideration structures: Earn-outs and contingent consideration rose slightly, being used to bridge valuation gaps in more instances than previous years. Public companies increasingly targeted transformative private deals using their listed scrip. Where listed scrip was used, on average, it represented more than half of the total consideration.

FIRB: FIRB refund and rebate arrangements in competitive auctions resulted in sellers encouraging bidders to submit their FIRB application ahead of being selected as preferred bidder to shorten the period between signing and completion and gain greater insight on the certainty of FIRB approval earlier in the auction process.

Tailwinds for sellers: Improved interest rate outlooks, a relatively low Australian dollar, and strong buyer appetite—particularly from private equity—are expected to drive a new wave of activity. Momentum will build and give confidence to sellers through 2025. The pipeline of assets is exceptionally strong, boding well for near-to-medium term activity.

Carve-Outs on the rise: Corporate portfolio reviews and greater scrutiny on optimising the business mix are likely to fuel divestments. We saw this theme in 2024 and continues to build 2025. This will see opportunities for Strategic and Financial Sponsor buyers alike, but particularly private equity.

Listed scrip deals: With IPO markets subdued, listed companies are increasingly using scrip to pursue transformative acquisitions—an emerging trend we expect to continue. Listed acquirers have been emboldened by the success of the Chemist Warehouse-Sigma transaction. For sellers, a new and attractive channel has been opened up to access public market valuations and synergy value creation.

Regulatory shifts: Upcoming changes to ACCC notification requirements and FIRB incentives will reshape deal timelines and approval strategies, especially in competitive processes. Careful planning by bidders and sellers will be needed where signing is targeted in the next 6 months as to how to position for the merger reforms coming into effect from 1 Jan 2026. Tax will remain a key regulatory issue for foreign sellers and bidders with significant changes on the horizon to Australia’s foreign resident capital gains tax regime – which will include a new ATO notification process – and the ushering in of a new tax framework for FIRB approvals. 

Deal certainty in focus: In a climate of policy uncertainty, we expect buyers to place greater emphasis on material adverse change (MAC) clauses and conditionality. Buyers will be cautious of their acquisition assumptions will be undermined, while Sellers will prize deal certainty and use competitive tension to maximise this. We have already seen a few instances in large deals where MACs have been alleged by a buyer. Whether a MAC is adopted, how it is formulated and what is excluded will receive more scrutiny than ever. Now more than ever, the MAC debate will be hotly contested.