Under the Spotlight – Mergers and Acquisitions In a New Climate

Published on 17 February 2020

In this edition of ‘Under the Spotlight’ Ansell Strategic examines the Australian Merger and Acquisition activity as it gains momentum in the aged care and retirement living industry.

The consolidation process is gearing up again and we are beginning to see the trickle of M&A activity in the residential aged care sector gather momentum. But this current environment is very different to what we saw during the Second Wave of investment 2013 to 2017, where providers sought scale to prosper in a bullish market.

During that period, vendors moved quickly to meet buyers head on and achieved record prices before the Government brought down the axe in the 2016 Federal Budget. Today, some providers are divesting because of the inherent uncertainty facing the sector. Others are driven to leave because of financial pressures, and fewer buyers are active.

To succeed in the current environment, an alternative approach to acquisitions and divestments is required. It is critical that both buyers and sellers consider the following key success factors:

  • Understanding the motivations of the other party.
  • Evaluating the value proposition and risks.
  • Developing a price strategy that reflects the motivations, value, risks and market conditions.
  • Transaction management (due diligence through to transition).

You can read more in our report below.