Report signals seller’s market, strong prices

Business owners looking to cash up could be in luck this year but don’t expect to see a return to the “irrational exuberance” experienced before the global financial crisis.

That’s the prediction of law firm Chapman Tripp in this year’s mergers and acquisitions trends and insights report.

The report says the gap between the number of cashed-up investors and the availability of good-quality assets would see a sellers’ market in 2017 resulting in strong price expectations.

But Joshua Pringle, a partner at the law firm, said past experience meant investors were hesitant to pay over the odds for businesses.

“We saw assets purchased prior to the GFC that went too far and they are still a fresh memory in the market.”

While private equity funds were cashed up he said they were not desperate to deploy that money and would only do so for quality assets.

Pringle predicted a busy first half of the year but said most deals would be done by June 30 because of the election, so it was unlikely to be a record year for merger and acquisition activity.

But depending on the election result there could be an end of year burst in activity.

The law firm also predicts that a speed-up in the overseas investment office process could result in less of a competitive advantage for domestic buyers.

It predicts continued interest from Chinese investors, especially in the natural health and nutraceuticals sector.