The number of mergers and acquisitions fell by 32% after the pandemic

The number of Australian mergers and acquisitions (M&A) transactions fell by 32 percent in the 18 months to December 2023.

This is evident from an inaugural report from accounting firm Grant Thornton, titled Retail Dealtracker 2024, which analyzes Australia’s local M&A and share markets.

Despite lower deal volumes, Australia remains attractive to investors, reporting $5.9 billion in domestic deals and $7.4 billion in reported cross-border deals.

Apparel is the second largest sector with three deals totaling $2.1 billion. A major transaction was the acquisition of Zimmermann by Advent International for $1.7 billion.

Meanwhile, the sale of David Jones through Anchorage Capital Partners was back in Australian ownership in 2023 at a significant discount.

In 2014, Woolworth Holdings Limited acquired David Jones for $2.1 billion. Anchorage Capital Partners later purchased David Jones’ operating business for $100 million in March 2023, excluding the flagship Bourke Street Melbourne store.

Apparel was behind beauty and pharmacy, with a disclosed total deal value of $6.5 billion. The report states that despite only 27 deals in this category, the total transaction value was driven by two major acquisitions: L’Oréal’s $3.7 billion purchase of Aesop in August 2023, which marked the largest beauty acquisition in Australia , and Kiring Health Science Australia’s $1.9 billion. acquisition of Blackmores in August 2023.

Other notable fashion acquisitions include Seafolly in 2023 by an anonymous buyer in Asia. The report also noted that foreign buyers, recognizing the global appeal of these luxury brands, paid record values ​​that Australian capital markets were unlikely to match.

“Historically, the private equity sector has produced high-profile retail investment success stories with consumer brands such as Burson Auto Parts, JB Hi Fi, Rebel Sports and Petbarn,” said Peter Thornely, financial advisory partner at Grant Thornton.

“The continued success of these diverse companies can be attributed to a common theme – their products are linked to key lifestyle aspects such as sports, cars, family and pets – making them attractive for customers’ discretionary spending.”

Grant Thornton added that for private equity investments to be truly successful for retail brands, the acquisition must be seamless and not immediately obvious to the brand’s customers.

“It is imperative that brands undergoing outside investment maintain their authenticity and unique brand personality, which is what attracts customers in the first place and ensures their continued loyalty.”

The data in the report is compiled from a variety of sources, including the Australian Bureau of Statistics (ABS), S&P Capital IQ, the Australian Securities Exchange, Mergermarket, IBISWorld, company announcements and other publicly available information.