The focus of M&A practices at most law firms has been on the booming energy & resources sector but 2010 will also see increased consolidation in both the financial services and the industrials sectors, according to Allens Arthur Robinson head of M&A Ewen Crouch.

“I think there are good prospects for M&A activity across the financial services spectrum as well as in the industrials area and, of course, energy & resources which I think will be the mainstay,” Crouch said.

Uncertain economic conditions at the start of 2009 made recapitalisation and debt management priorities and put any acquisition aspirations on the backburner for most companies. However, clients are now acknowledging that the economy seems to have bottomed out and are once again turning their attention to inorganic growth.

“I think the outlook now is reasonably promising,” Crouch said. “It’s still uncertain but as the year progresses, I would expect that we would see activity increase.”

One aspect that has hampered M&A activity since the global credit crunch has been the lack of debt funding available. This has had a significant impact on private equity clients, who had previously been very active in the market conducting highly-leveraged buyouts. “Some of the private equity acquisitions rely very heavily on debt,” Crouch said. “Now private equity clients are looking at making acquisitions with much more significant equity contributions.”

Australian M&A activity decreased by 15% to US$66bn in 2009 while New Zealand M&A activity fell by more than 60% to just US$1.3bn (down from US$3.3bn in 2008), according to figures released by Bloomberg.

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