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Australia’s M&A market is poised for a notable increase, with specific sectors expected to “drive a resurgence” in deal-making by the latter part of 2025. However, according to Ashurst, this potential growth is contingent upon the “continued volatility” in the US.
Ashurst’s M&A Deal Report 2025 has indicated that the Australian merger and acquisition market is set for a significant uptick in activity, despite the previous year’s market being “relatively modest”.
The inaugural report unveiled that the anticipated increase in M&A activity in the upcoming year can be attributed to a combination of favourable economic conditions, including “falling interest rates, a low Australian dollar and pent-up investment capacity”.
The Biglaw firm predicts that the latter half of 2025 could witness a “resurgence” in M&A deal-making, with private capital and foreign bidders poised to catalyse this revival. However, it explained that this resurgence hinges on continuing inflation moderation and stabilising the economic landscape following the Australian federal election.
While Neil Pathak, Ashurst’s head of M&A in Australia, said he is “cautiously optimistic” for an active year in the M&A market, he acknowledged that the uncertainty surrounding political developments in the United States under the Trump administration presents a significant “wild card”.
“We are cautiously optimistic of an active M&A market in 2025. However, the big unknown is how the business world adjusts to the Trump administration’s policies. Call it the US wild card. This may take some time, but we expect today’s uncertainty and volatility to subside and give rise to a strong second half of 2025 for deals,” Pathak said.
The M&A market can still have a strong year as predicted, Pathak explained, provided the business world can successfully “navigate the tariff battles and adjust to a new norm”.
The rise of private capital
According to the Ashurst report, one of the most compelling trends identified was the increasing influence private practice will continue to have on the Australian M&A landscape this year.
Although private capital bidders experienced a “slow start” in 2024, the BigLaw firm noted that they “gained momentum” in the latter half of the year, ultimately accounting for 30 per cent of transactions, an increase from 20 per cent in 2023.
Susannah Macknay, Ashurst’s M&A partner, explained that while private capital has a “growing influence” in the market, the challenge that remains is “finding the right targets”.
With the report indicating that private ownership is being perceived as more “attractive”, particularly for mid-market listed companies, Macknay projects that 2025 will “be the year of the take private” deals.
“More complex reporting requirements for listed companies and challenges of finding new institutional investors for mid-sized listed companies will be factors making it more attractive for companies to be taken private,” Macknay said.
She went on: “As part of the private capital drive, we also expect to see more direct investments from large Australian superannuation funds in 2025 as their funds under management constantly rise.”
Sectors to watch in 2025
The five key sectors anticipated to experience significant M&A activity in 2025, according to Ashurst, included:
Materials: The sector recorded the “largest number of deals”, totalling 14, which accounted for 33 per cent of the overall volume, and the “highest total deal value” at $24.9 billion. Ashurst anticipates that this sector will continue to demonstrate robust performance through 2025.
Energy: The firm has indicated that this sector is “ripe for M&A” due to the significant challenges associated with “decarbonisation” and the “diverse array of industry participants” involved. Last year, this sector accounted for 18 per cent of the total deal value.
Technology: The sector is poised for substantial growth, as Ashurst asserts that “emerging technologies at low $A prices are highly attractive to foreign investment and private capital”. In 2024, technology constituted 14 per cent of all total transactions.
Industrials: As the sector experienced significant growth in 2024, increasing from 7 per cent in 2023 to 12 per cent, Ashurst anticipates that this growth trend will persist throughout the current year.
Real estate: While the sector has had “a quiet few years”, the firm anticipates that a convergence of factors, especially “valuations bottoming out, the interest rate outlook improving and growth in some sub-sectors such as logistics”, will drive increased activity within the sector in 2025.
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