Merger & Acquisition Forecast 2018

What's ahead for merger and acquisition activity in New Zealand? MinterEllisonRuddWatts' Corporate team discusses trends and makes predictions for the year ahead.

What we expect in 2018

Scheme of arrangements

Schemes of Arrangement have become the most popular way to conduct friendly takeovers of ‘Code companies’. In 2018 we expect the number of schemes to increase and market practice to become more settled.

Overseas investment

The regulatory landscape for overseas investment will change in 2018. The new Government has already introduced a Bill amending the Overseas Investment Act to classify residential property as sensitive, and issued a Ministerial Directive Letter making it harder for overseas persons to invest in rural land. However, we expect that the OIO’s new processes and increased resources will continue to bring processing timeframes down.

Merger clearances

2017 was a significant year for merger clearance applications, decisions and appeals, with unprecedented third party involvement. On the back of this, the Commission is looking to improve transparency and efficiency in 2018, when even more complex merger cases are anticipated.

Warranty insurance

The use of warranty and indemnity insurance is now market practice in the private equity space. With upward of nine insurers who actively consider underwriting in New Zealand, expect to see more competitive terms but also less interest in difficult, poorly diligenced or badly advised deals. Engaging a quality M&A broker will help ensure your deal is attractive to insurers.

Banking and funding

The banking market will become increasingly competitive (with more offshore banks entering the NZ market). There will be more scope to run competitive processes to arrange your borrowing requirements (both in New Zealand and offshore).

Private equity

Gender diversity is very topical in the New Zealand business environment. However the focus to date has been on listed companies. In Europe and the US, the issue of gender equality has extended to the private equity industry and we expect New Zealand will follow suit. New Zealand funds looking to raise new money should be prepared to explain their approach to gender diversity.

Read the full Merger and Acquisition Forecast

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