“No longer should these funds be thought of in public M&A situations as reactive participants. Rather, given their stakes in many listed companies and also given the size of funds under management, the emergence of a preparedness to be involved in deals early represents a major moment for Australian M&A. Watch this space in 2019.”

Secondly, Mr Damian and Mr Haddy said boards will continue to take primary control, despite pressure being felt from shareholders.

“Despite immense pressure from shareholders on a range of fronts, 2018 has seen no shortage of board taking control in M&A situations, disclosing approaches, rejecting approaches and generally forming a view and fighting the corner.”

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Political risk is another thing to be wary of, according to the HSF partners, with uncertainty both in Australia and around the world set to impact some sectors more so than others.

“It can be a fine line between politics and policy, but – either way – uncertainty is on the rise both in Australia and around the globe. Some of this is sector-specific (information, energy and agriculture spring to mind) and some of it has a protectionist bent (foreign investment restrictions, tax reforms, and tariffs),” Mr Damian and Mr Haddy said.

“There will be risks and opportunities for canny investors able to navigate the more treacherous waters.”

Stub equity deals will also continue to rise, they say, with a number of transactions in 2018 set to continue the development of stub equity deal technology, “on the back of prior deals such as KKR-Pepper and PEP-Patties Food”.

“That technology accommodates the different desires of different shareholders. The Capilano Honey and Greencross schemes are classics of the genre in 2018. While traditionally the realm of the PE bidder, we have also seen this deal structure extending to corporates, such as in the Brookfield- Healthscope proposal,” the partners noted.

“We expect more bidders to think deeply in relation to these kinds of deal structures in 2019.”

The following year, 2019, is also set to see more pressures for companies to demerge – something the market saw recently with the Coles demerger and then the proposed Commonwealth Bank demerger subsequently.

“We expect to see more of this in 2019 – demergers present an option for companies to focus on core areas and, from execution, avoid the ups and downs of equity markets and the vagaries of sale processes,” Mr Damian and Mr Haddy said.

The private equity sector will continue to ramp up over the New Year, according to the partners, with funds dedicated to these transactions in 2018 needing to be deployed.

“While there have been some hits and misses in 2018, the success rate is probably no worse (and is arguably better) than private market auctions. And there is often the potential to deploy considerably larger sums,” they added.

In terms of what other sectors will see strong M&A activity, Mr Damian and Mr Haddy said property, financial services and health are the ones to watch.

“Always a risk in trying to pick the winners, but the macroeconomic picture, current and pending regulatory reforms (and royal commissions), as well as industry evolution more generally mean that property, financial services and healthcare are likely to continue to shine,” they said.

Further, the partners stated that they believe the M&A space will generally see the continuation of big dollar transactions and a willingness for boards to take on “transformative deals”. The pair noted that foreign bidders will also “have their role to play here”.

Local infrastructure will also result in higher activity, Mr Damian and Mr Haddy said.

“Leaving aside the increasing heat in foreign investment regulation and tax policy, investors will be faced with a shorter list of potential brownfield transactions – both in privatisations and secondary trades,” they explained.

“Instead, focus will move even further towards greenfield projects and expansions of existing facilities, as well as ‘core-plus’ and ‘infrastructure-like’ sectors. The changing nature of our energy and transportation networks, as well as developments in waste and recycling sectors, are all likely to provide opportunities.”

Last but not least, Mr Damian and Mr Haddy said 2019 will see “truth in takeovers”.

“The Finders Resources judicial review process, ASIC’s revisiting of its policy, and the broadening use of various types of (ostensibly) binding ‘intention statements’, will all contribute to an uncertain area where players may try to take advantage,” they explained.