The report draws on data taken from the firm’s proprietary database of transactions, combined with in-depth research for the 12-month period ending 30 September 2022.

Commenting on the findings, Corrs partner Adam Foreman said that the market is only getting more complicated.

“In the current environment, deals are getting more and more complex. We see engagement with major shareholders as now being a ‘must’ rather than a ‘nice to have’,” he said.

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“Bidders have a range of structures they can use to create greater deal certainty and bring boards to the negotiating table. But one of the lessons of the last 12 months is that getting the timing, approach and form of that arrangement right is critical.”

However, the research also shows that deal success rates are back to over 80 per cent, returning to pre-COVID levels, with ESG now a driving force of M&A activity, including divestments and disposals driven by shareholder activism and regulatory pressure.

Further, strong competition for assets and an evolution in the M&A “playbook” resulted in bidders needing to boost their initial offer by an average of 12.86 per cent. Australian bidders continued to dominate the market, accounting for 65.57 per cent of all activity. This represents a significant shift from 2011, when just 39 per cent of bidders were Australian.

Corrs head of corporate Sandy Mak said that while deal making slowed towards the end of 2022, an M&A rebound is coming.

“Looking [ahead], we anticipate structured M&A to become more dominant, continuing the increased use of bespoke deal structures to bridge gaps between buyers and sellers,” she said.

“We also expect strategic acquirers to be more prevalent and successful in 2023, with previously ‘out-of-favour’ sectors offering interesting M&A opportunities in the Australian market.”

The release of the outlook also follows a recent episode of The Lawyers Weekly Show, where Ms Mak revealed what the M&A market would look like over the course of this year.

She said that there are a number of opportunities in front of M&A lawyers — but also a number of challenges.

“A straight acquisition of a hundred per cent for cash is not going to be the easiest way of getting a deal done now. Inventive structures to bridge risk and valuation gaps, I think it’s one of the biggest contributing, one of the biggest value add that I think lawyers can provide in the current environment,” she explained.

“I think in the current market where growth through M&A is only going to be really targeted for the right assets, really keeping an eye out for the right deals for the right clients and understanding your client’s strategic initiatives and objectives is a really big part of helping your client achieve what they want and grow through the lens of M&A. The more you understand what your client needs and wants, the better off you are going to be as a practitioner in terms of being able to deliver a successful outcome for them.”

As a self-described optimist, Ms Mak said her perception of the M&A market — despite a potential recession — remains positive, but also that resilience is an important characteristic for M&A practitioners to have.

“There are lots of setbacks, not just in the deal doing, but in the pitching and the marketing and all of that sort of stuff. And I think that what you need to do in order to be a successful practitioner is just to keep at it and to keep bouncing back. And every lawyer, and this is what I do say to the younger lawyers, every lawyer will make a mistake at some point in [their] life and not one, then more. The marker for a good lawyer is not that they didn’t make the mistake, but how you recover from the mistake,” she added.

“Maybe you can say optimism and just really having a passion and energy for what you do are kind of related. I’m a realist about market conditions, so we’re not going to force clients into doing deals where we actually think the market’s tanking and going in the wrong direction. But I think what keeps you going in a difficult market environment is just having a bunch of people that you really enjoy working with and collaborating with. And that includes our clients and our team.”

Therefore, for M&A lawyers to best succeed over the course of this year, Ms Mak said collaboration would be key moving forward in the current M&A market.

“I would say you need to be looking forward, you need to be trying to anticipate the next thing, where the next development in M&A is likely to come from, where the next opportunities are likely to lead, and you need to be ahead of the curve in terms of finding the opportunities,” she added.

“What I think Corrs does really well is cross-collaboration across all of our practice areas. As an M&A practitioner, I work really closely with our restructuring and insolvency practitioners because they can see the next thing that’s coming. In turn, they rely on us for an understanding of which sectors are really, really going to be hit. I think that firms that collaborate across practice groups will be best placed to holistically navigate a difficult market environment.”

The transcript of this podcast episode was slightly edited for publishing purposes. To listen to the full conversation with Sandy Mak, click below: