The Australian M&A Outlook 2025

The Australian M&A market has been on a real journey over the last few years, marked by extreme highs, some cautious retreats, and now what feels like a slow and steady return to more stable footing.  

After the turbulence of the COVID-19 era, it’s fair to say we’re entering a new chapter, with fresh opportunities (and risks) emerging for buyers and sellers alike.  

A throwback: the pandemic that triggered a market rollercoaster

Following the onset of the pandemic, government stimulus and low interest rates led to an unprecedented surge in M&A activity. In CY21, cumulative deal values crossed AUD250b, with competition from buyers and financial sponsors driving up valuation multiples.  

However, the momentum wasn’t built to last. As monetary policy tightened and financial markets corrected through CY22 and CY23, deal activity slowed noticeably. Technology valuations in particular saw steep declines.  

Signs of stability in CY24

The good news? In 2024, we’ve seen some encouraging signs of recovery.  

Since the COVID-era stimulus, the forward EV / EBITDA multiple of the ASX200 has declined from 10.5x to 8.7x. This decline in valuation multiples, including in private company deals, initially widened the gap between what buyers were willing to pay and what sellers expected, which made it harder to get deals done in CY22 and CY23. However, in the last 18 months, we’ve seen multiples and interest rates stabilise. In our view, this helps to build a more predictable and balanced environment for deal-making.  

According to a report from Mergermarket, cumulative M&A deal value rose to 30% to AUD138.9b from AUD106.5b, even though the number of transactions stayed relatively similar to CY23. This suggests greater confidence in deal-making, not through sheer volume but more through substantial transactions being completed.  

It’s also worth noting that while IPO activity has remained very subdued in Australia, the private M&A market has stayed busy. Buyers and sellers are showing more willingness to meet in the middle, helped by greater stability in valuation expectations and interest rates.  

Key factors shaping the near-to-medium-term outlook

As we look ahead, several forces are set to influence deal-making sentiment in Australia:  

•  Global trade uncertainty: Particularly around the impact of the new US tariffs remains unclear.  
• Expectations of monetary policy easing: Potential interest rate cuts could further support M&A activity.  
• Currency movements: A weaker AUD may make Australian assets more attractive to offshore buyers.  
• China’s demand outlook: A subdued view in key sectors like iron ore. 
• Sustainability and minerals: Strong global demand for lithium, cobalt, rare earths and other ‘green economy’ minerals is fueling domestic consolidation while encouraging domestic players to scale up operations.  
• Regulatory changes: A new mandatory merger control regime comes into effect from January 1, 2026, introducing more rigorous scrutiny of transactions like notifying the ACCC for deals above certain thresholds, tougher assessments etc. 
• Political backdrop: The outcome of the upcoming Australian federal elections on May 3, 2025, could also influence the M&A market.  
• Innovation and technology: AI and other disruptive technologies are creating new business models and M&A opportunities.  
• ESG focus: Investors and acquirers alike are playing closer attention to sustainability credentials.  

Where we see activity (and cautious optimism)

At InterFinancial, our deal volumes have generally mirrored the broader national trend from CY21 to CY24, with deal-flow noticeably strengthening over the last 6 months. We’re seeing particular momentum in:  

• Healthcare: A defensive sector that continues to attract investment.  
• Renewables and batteries: Driven by energy transition and sustainability themes. 
• Technology, consumer, B2B services and consulting: Where inquiry levels remain healthy.  

With inflation largely under control and an easing monetary backdrop, we remain cautiously optimistic. While global risks are never far away, Australia’s M&A market feels more balanced today than it has for several years, setting the scene for a more active deal-making environment ahead.  

Whether you’re a business owner considering your next move, an investor exploring opportunities, or a corporate development team assessing the market landscape, now’s a good time to start the conversation. At InterFinancial, we work closely with clients across sectors to navigate complex deals with clarity and confidence. If you’re thinking about a transaction in CY25 or beyond, reach out to Anuk! We’d be happy to share our insights and help you explore your options.