Powered by MOMENTUM MEDIA
Powered by MOMENTUM MEDIA

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.

Defence sector deal confidence ‘vanishes’: Market report

The prospects of mid-market merger and acquisition activity in the defence and government sectors in the next 12 months have dwindled, according to a new report released by national accounting association Pitcher Partners.

The prospects of mid-market merger and acquisition activity in the defence and government sectors in the next 12 months have dwindled, according to a new report released by national accounting association Pitcher Partners.

The Dealmakers Mid-Market M&A in Australia 1H20 update from Pitcher Partners, produced in conjunction with Mergermarket, has found a drastic decline in enthusiasm for defence sector deals with not one operator believing there would be an increase in the near term, and figures for the government services sector only slightly more favourable.

Advertisement
Advertisement

The news comes as a striking change from an earlier (annual) report released before the outbreak in February, in which 43 per cent of respondents tipped an increase in defence deals. 

The collapse in sentiment comes on the back of changes to the Foreign Investment Review Board framework, which set to zero the threshold for FIRB review from late March, and the proposed new changes that are due to start from January 2021.

Under the revamped FIRB conditions, the federal government will be able to impose conditions or block investment by a foreign person on national security grounds regardless of the value of investment and introduce mandatory notification of any proposed investment by a foreign person in a “sensitive national security” business.

PROMOTED CONTENT

Pitcher Partners corporate finance partner Michael Sonego said confidence in completing mid-market deals had been sapped in many sectors during the first half of 2020 but it had vanished completely in the defence sector.

“We had anticipated the regulatory changes could have a chilling impact on business investment in areas like defence and government services but the fall in confidence for these sectors is still remarkable,” he said.

“Other areas where there has been a sharp decline are government services and energy, mining and utilities. Each were thought to offer opportunities for deals by about a third of the respondents in the last survey, but that confidence has disappeared. Only 3 per cent of respondents think either of those sectors will grow.”

Defence sector deal confidence ‘vanishes’: Market report
Aeronautics-LAND-129-Phase-3.jpg
lawyersweekly logo

more from defence connect

Sep 23 2020
World’s rush to limit manufacturing dependence on China presents opportunity
Growing concern about overdependence on easily hindered supply chains has prompted many nations and ...
Sep 23 2020
Marines establish new littoral capability to counter South China Sea forts
The US Marines have introduced a new littoral regiment designed to directly counter Beijing’s Sout...
Sep 23 2020
Tasmanian SME secures defence export competitiveness grant
Defence Industry Minister Melissa Price has announced that the federal government has awarded a $150...
FROM THE WEB
Recommended by Spike Native Network