Dear Readers,
Welcome to the October 2020
edition of the Funding Strategies newsletter!
Flora Mok, our Director M&A, recently attended MergermarketAustralia's M&A Forum and provided us with the following notes:
There is increased M&A activity for companies with enterprise value ("EV") below $100m.
Despite the global pandemic, there are not too many distressed assets in the market.
There are not many deals involving companies with EV above $100m.
The main difficulties involving M&A activities now are "difficult to maintain relationship with virtual meetings" and "difficult to determine the valuation".
When compared with GFC in 2008, there are no liquidity issues and it is expected that there will be a quicker recovery than after the GFC.
Asia is optimistic and a faster recovery is expected due to an increase in sentiment. Asia had previous experience with SARS and has been better prepared for this pandemic than other regions.
The Australian FIRB's increase in threshold means a longer approval process which leads to increased risk, uncertainty and finance costs. Hence, there has been a significant drop in the transaction size and amount (though it is expected to be temporary). Australia and New Zealand are the key locations for Japanese investors.
In order to cope with the travel restrictions, virtual due diligence has been performed by investors and banks in some countries such as the US, Japan, etc. No physical due diligence has to be done. Deals can now be done 24x7 due to everything being done online. Excellent project management is necessary to reduce risk.
Sponsors have been active in public companies and are supported by foreign investors. There has been lots of money in the public market. Banks have seen loan markets and equity markets doing quite well and are supporting strong customers.
This edition of our newsletter includes:
Our Products: COVID-19 support;
Introductions to Project Pars and Cluster Biotechnology;
An update from Enviro Sand;
Partnering with BRICKLET;
Updates from BlueMount Capital: Introducing Project Slate and Project Linteum, update from XING;
Upcoming events from ACBC.
As always, we invite you to download our updated deal list from our website (registration / log-in required, membership is free).
For more information please contact us. We look forward to hearing from you!
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