Venture Capital and Mergers & Aquisition Trends

As Australia continues to emerge from the pandemic, albeit with a few hiccups, appetite for deal making is beginning to increase, a trend which we expect to see into 2022 at the least. In this report, we look back at M&A activity in Australia over the last 14 years, from January 2007 (prior to the Global Financial Crisis) to December 2020, using trends to inform our expectations of future M&A activity. We also consider more recent VC activity from 2019-2021 and the current IPO Market.

We’ve paid special attention to the years 2009 and 2020 which displayed interesting similarities including a spike in the number and value of deals. These two years, 2009 and 2020, were also years during which Australia was feeling the impact of major economic crises in the Global Financial Crisis (2007-2009) and COVID-19 (2020-ongoing) respectively.

1. M&A Transactions

2009 and 2020 trends

2. M&A Transactions

Trends from 2007 – 2020

3. Venture capital

Trends from 2019 – 2021

4. IPO Market

Current trends

5. Current deal trends

Post-crisis deal resurgence

1. M&A transactions – 2009 and 2020 trends

In the difficult years of 2009 and 2020 there was a significant decline in both the number and aggregate value of M&A transactions in Australia. In 2009 aggregate value fell by 48% while in 2020 aggregate value fell by 26%.

During the GFC in 2009 and COVID-19 in 2020, smaller transactions under %5m took prominence:

  • In 2009, deals under $5m accounted for 50% of all transactions – 10% above average
  • In 2020, these transactions made up 52% of transactions – a whopping 41% over the average.

This is in comparison to transactions between $10m – $50m making up 26% of all transactions over the entire 2007-2020 period.


When the economy goes through a tough period, initially, people look to make smaller bolt-on acquisitions rather than take the risk involved in making larger acquisitions. 

These trends highlight risk-averse behaviour and follow those in consumer and business confidence. If the size of transactions lift as consumer and business confidence have, we can expect mid-market M&A to experience a strong uplift alongside economic recovery. 

This is evidence that coronavirus has had little impact on this mid-market, which is a resilient sector.  

Further evidence can be seen in the volatility that exists in the number of transactions in the $5m – $10m category across the same period.  

There is an increase in the number of higher value transactions, and therefore a decrease in those with a lower value, when economic conditions are strong  

It’s interesting to note that in the first half of 2021 the number of deals announced has increased sharply by more than 2.5 times the average over the last 5 years, with many of these deals being mega deals with a value more than $1 billion. 

While there is a strong correlation between total and mid-market M&A, fluctuations in mid-market M&A are less significant due to the mid-market being less susceptible to economic volatility. 

2. M&A transactions – trends from 2007 – 2020

William Buck’s study of the Australian M&A market from 2007 to 2014 shows whilst there have been big swings in the number and value of large or mega size transactions, the trends in mid- market deals under $100 million have been very consistent over the last 14 years.

Overall, transactions under $100m in value made up on average 87% of the total number of transactions over this period.

  • Smaller M&A transactions with a value under $10m made up the majority of transactions, averaging 54%
  • Deals with a value between $10m to $50m made up 26% on average
  • Deals with a value of between $50m to $100m made up on average 7%.

Sector performance

Sectors which accounted for the largest portions of Australia’s mid-market aggregate M&A transaction value over the last 14 years include: Consumer Discretionary (including automotive, retailing and apparel) (21.9%), Industrials (including transport and toll road operators) (18.7%) and Materials ( including chemicals and construction materials) (12%). Together, these sectors accounted for over 52% of Australia’s mid-market aggregate M&A transaction value from 2007 to 2020.  

Information technology (IT), healthcare, materials and utilities were the sectors that saw the most year-on-year growth in their aggregate transaction values in the middle market from 2007 to 2020.  

 The IT sector has accounted for an average of 7% of the aggregate value within the Australian M&A market. Given the advancement in technology that occurred during this period and the speed at which it’s been adopted worldwide, it is hardly surprising that we’ve seen growth in this sector. IT has had the most periods of growth year-on-year and has been the only sector which showed an increase in the number of transactions during 2020.   


We expect this trend will continue due to the digital transformation that’s occurred in response to COVID-19 and the emergence of artificial intelligence, blockchain, and more.  

Growth in healthcare transactions over the past 14 years is likely due to increased global healthcare reform and the appeal of mergers to providers that are trying to balance access to care, reduced cost and improved care quality. It’s also a highly innovative industry with businesses often on the lookout for funding to fuel new technologies such as telehealth, and it’s largely resistant to recessions. 

Given the sector is forecast for an annualised 2% growth over the next five years, we expect healthcare to account for more of the total aggregate transaction value each year in Australia. 


Foreign acquirers account for 24% of the aggregate volume and 30% of the aggregative value of Australian middle-market M&A transactions – Trends demonstrating that foreign buyers consistently participate in larger value transactions. 

The average EBITDA multiple remained relatively consistent between local and foreign acquirers from 2007 to 2020, except for 2008 during the GFC and 2020 during COVID-19. During these periods, foreign acquirers paid higher average multiples.  

From 2007 to 2019, unsurprisingly, the US and UK were the two largest foreign investors into Australia, accounting for 48% and 43% of foreign investments respectively. There’s been a marked increase in investment from many East Asian countries including China, Japan and Honk Kong, corresponding with the emergence and integration of many of the Asian economies into the global economy.  


While the proportion of local buyers sits at around 76% reasonably consistently over the 14-year period that we’ve undertaken this study, trends demonstrate that the proportion of local buyers increases in periods of economic uplift with strong exchange rates, optimistic business sentiment and GDP growth.  

That foreign buyers are participating in larger value transactions doesn’t mean that they are paying a premium for their acquisitions but supports the notion that to achieve the growth, synergies and scale which they require, they buy larger businesses. 

Foreign investors will exert more interest in the Australian market during a global downfall as we tend to remain relatively stable as an economy. This means there’s higher interest in getting into the market, and investors will pay more. This is particularly evident today with a raft of foreign buyers looking to acquire Australian companies.

3. Venture Capital – trends from 2019 – 2021

Global trends

Globally, 2020 saw the highest aggregate Venture Capital deal value over the last decade, sitting at US$363 billion – 25.5% above that in 2019. This is despite the number of deals dropping slightly, by around 6.5%.  

The size of deals increased, with the average sitting at US$8.5m in 2020, and US$7.6m in 2019.  

Trade sale has been the most popular exit strategy for venture capital deals over the last decade with trade sales accounting for two thirds of exit strategies. This remains the case.

Trends at home

Like VC globally, in 2020, Australia had the highest total deal value at $US2.7 billion.  

VC investors have consistently shown to demand high rates of return (28%-38%) in comparison to other investor types such as senior lenders, asset-based lenders, mezzanine funds, etc.  

In Australian VC, IT had the highest number of deals in 2020 at 45% of all deals. This is consistent over the past decade with IT accounting for 45-50% of the number of VC deals.  


William Buck expects the IT sector to grow, with investment in the space having matured. There’s been a number of really good and proven investments in the space, globally and in Australia.  

The market has developed as has investors appetite for risk in this emerging space, and tech has developed with products such as artificial intelligence and cyber security. 

Importantly, there are more referenced examples of positive VC outcomes in Australia like Canva and people are starting to relate to the sector better. There’s more trust. 

4. IPO market – current trends

Last year, the Australian IPO market underwent marked growth of 85% in aggregate volume and an enormous 240% in value, despite, or potentially somewhat due to the implications of the pandemic. 


This has continued into 2021 and we expect it to into 2022 because of the higher volume of money looking for a home in markets, and investors chasing higher returns than what they would see by keeping their money in banks. 

Equity markets are expected to continue to trade at higher valuations due to monetary and fiscal stimulus introduced in 2020. As a result, we can expect to see private companies wanting to go public, raising capital at higher valuations to realise expansion opportunities. 

The market has developed as has investors appetite for risk in this emerging space, and tech has developed with products such as artificial intelligence and cyber security. 

Importantly, there are more referenced examples of positive VC outcomes in Australia like Canva and people are starting to relate to the sector better. There’s more trust. 

5. Current deal trends – post-crisis deal resurgence

What’s behind the current deal making resurgence?

Traditionally, post-crisis periods see a spike in the number and value of deals across Australia and globally, with the few years following the Global Financial Crisis (GFC) being the most recent evidence of this.

Throughout the 2020 recession, Coronavirus offered a unique opportunity for certain industries, such as technology and healthcare, to thrive. These sectors, which became paramount to economic recovery, are now leading the resurgence of deal making and hence account for a large portion of the transactions we’re seeing.

Timing of deals

The timing of deals was generally extended during the pandemic, with each stage of a transaction taking longer to accomplish. This was due to diminished staff levels, lockdowns, new risk factors to account for (including measuring the sustainability of performance before, during and after the pandemic), new due diligence considerations and competing priorities within businesses. A lot of these deals are now being revisited and fast-tracked.

Pivoting to thrive post-pandemic

Many companies have been quick to respond by repositioning themselves to thrive post-pandemic. Some are choosing to acquire new businesses to improve supply chains, undertake strategic mergers or pivot in terms of product and service offering orcreate the need for deal-making to improve their capabilities. While others are looking to make acquisitions due to the challenge posed by organically growing their business to justify market valuations.

Lower interest rates and business optimism

In Australia, an expected increase in deal making might also be testament to lower interest rates, which the RBA doesn’t expect to see lifted until 2024, generous government stimulus and a higher AUD/USD exchange rate.

Rapidly growing business optimism also has a role to play, with NAB’s Business Confidence index demonstrating that throughout 2020, sentiment was at -66% and is now sitting at around +10%. This is reflective of trends in 2009, where sentiment plummeted to -32%, and then rapidly increasing to almost 18 index points in September 2009.

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