EY’s Australasian Capital Confidence Barometer shows that 99 per cent of Australian and New Zealand executives expect the M&A cycle to remain stable or improve and more than 92 per cent expect the same or more deal completions in the next 12 months.
In contrast, overseas executives have shown less optimism with the percentage that expect to make acquisitions in the next 12 months, trending down to 46 per cent – the lowest point for four years.
“We have seen this dichotomy before in our survey. This is an indication that we will likely see a temporary pause in activity outside of our market, said EY Oceania managing partner, David Larocca.
“It may be an important signal for the local Australian and New Zealand markets, which tend to lag global sentiment.”
Further, despite leadership changes in both the Australia and New Zealand political landscapes, executives are feeling positive about the economy with a 9 per cent increase to 72 per cent.
About three in 10 local executives also indicate that they are concerned about the implications of geopolitical uncertainty on business growth.
According to EY, access to new markets is a key driver for deal making and local companies have a strong cross-border focus as a result. They are more focused on cross-border transactions than their global counterparts – 27 per cent versus 23 per cent, and therefore also more concerned about the impact of increasing protectionist barriers.
“Perhaps uncertainty is the new norm in deal-making, resulting in companies needing to balance growth ambitions with managing the risks on the horizon,” said Mr Larocca.