After the quietest year for mergers and acquisitions last year since the global financial crisis, bankers and lawyers are hoping deals in their pipelines will soon come to market and lift volumes.
However, activity this year is down more than 50 per cent on the corresponding period last year.
"I find it pretty hard to imagine we could have a worse year," Clayton Utz M&A partner Karen Evans-Cullen told The Australian ahead of the firm's release today of its annual report into deal-making trends, called The Real Deal. It shows the number of deals dived to 41, from 59 in 2011 and 85 in 2007. Last year, Clayton Utz got 10 of its 11 predicted trends right.
The report, which analyses public takeovers and schemes of arrangement worth more than $50 million, predicts a rise in strategic mergers "out of necessity", a strong advantage for "first movers" and increased interest in the food and agribusiness sectors.
Graincorp is in play, Elders' rural services business is up for sale and agribusiness Ridley is viewed as a target by analysts.
However, the report sees no end to the prolonged time it takes for deals to be announced and completed, and notes that the uncertainty from the federal election may "further erode" confidence.
"Once the outcome is known it could well stimulate activity by delivering the certainty needed to proceed with deals predicated on proposed regulatory changes or a particular regulatory landscape," the report says.
Deal flow in media could be ignited if parliament this week removes the 75 per cent reach rule, with Nomura analysts yesterday saying television networks Nine, Ten and Seven could move on regional networks Southern Cross, WIN and Prime, respectively.
Clayton Utz also believes regulatory changes will drive activity in financial services and telcos.
More activity is expected in retail and manufacturing as the high Australian dollar and weak sentiment weighs.
"I think you'll see a lot of boardrooms having a look at their strategy, having a look at whether things need to change, because in the past few years a lot of it has been focused on reducing costs," Ms Evans-Cullen said.
"There are only so many costs you can take out of it.
"Now you actually have to look at what is the strategic plan to get more revenue or be more profitable."
She said predators that announced first would have a strategic advantage as rival bidders would need to factor in a potential bidding war and the inability to dictate the timetable.
Last year there were only four bidding wars, also driven by the abundance of opportunities as asset prices fell and companies took pre-bid stakes, like Dulux's bid for Alesco. Private equity is particularly unkeen to bid against each other, said Ms Evans-Cullen , as seen in TPG's successful bid for Inghams after interest from Blackstone.
