A&O Shearman sheds light on global dealmaking in new report

“Despite global uncertainty and inflation, investor appetite remains strong – especially in sectors like energy, infrastructure, tech, and healthcare,” commented Simone Lowes, A&O Shearman partner. “The Australian M&A market continues to show resilience, supported by the potential for lower interest rates, relative weakness of the Australian dollar, and deep pools of private capital.” 

“Australia faces the challenge of navigating an increasingly complex military environment, marked by both conventional and non-conventional build-ups and shifting strategic alliances in the Asia-Pacific region,” said Dan Harris, A&O Shearman partner. “Regardless of the outcome of the United States’ strategic review of AUKUS, this challenge remains pressing.” 

Harris added: “In Europe, we have observed a surge in private equity and venture capital investment driving innovation and growth within the defence sector. As the Australian government alone cannot provide the level of funding required to achieve its critical technology objectives (including those under Pillar II of AUKUS) we anticipate a similar rise in private capital investment in the defence sector in Australia.” 

Harris described the arrival of domestic defence-focused investment funds as a solid foundation. 

“However, Australia will need to look to traditional overseas sources of investment, such as the United States and the United Kingdom to accelerate progress at the pace required, and the Australian government will need to further reduce barriers to such investment and innovation,” Harris noted. 

Topics tackled

According to the global firm’s news release, the report reveals specific insights on the following subjects: 

• preferred equity instruments, which have drawn the interest of investors interested in novel and creative ways to deploy capital 
• private equity, which has stayed active, especially among mid-market take-privates and distressed acquisitions 
• private credit, which has stepped in to support deal financings 
• the life sciences sector, where companies and investors have been seeking innovative transactional structures in response to rising costs, complicated drug development, and challenging markets 
• the US outbound investment security program, which has been impacting joint venture structuring and counterparties associated with “countries of concern” such as China, Hong Kong, and Macau 
• industrial companies, which have been navigating energy costs, tariffs, and antitrust policies 
• defence M&A in Europe, where deal activity has been rising alongside increasing military investments and steps to streamline regulatory frameworks 
• take-private activity, which has been speeding up across Southeast Asia as de-listings in Singapore and Hong Kong increasingly inspire dealmakers to review ownership thresholds, governance rights, and compliance with new international standards 
• Europe’s chemical, steel, and other basic industries, which have encountered challenges caused by high energy costs, renewed tariff barriers, and social and environmental obligations, resulting in implications for European merger enforcement 

“The rapidly changing macro landscape through the first six months of the year has made M&A deals challenging to execute,” said an article authored by A&O Shearman partners David Broadley from London, Dirk Meeus from Brussels, and Scott Petepiece from New York. 

“Global M&A by value stood at USD1.6 trillion during the first half of the year, which although higher than during the same period last year masks a significant drop between Q1 and Q2,” the partners wrote in the article titled “M&A in a period of turbulence.”