Jan 30, 2020 | Corporate advisory

M&A and Capital Markets in 2020

Tim Bennett, Head of Capital & Corporate Advisory discusses the M&A and Capital markets, the type of clients we work with and conversations the team are having with clients.

1. Firstly, can you give us an overview of what the Prime Capital and Corporate Advisory Team do and typically for what type of clients?

The Prime Capital team provide corporate advisory assistance to clients seeking to sell their businesses, acquire other businesses, or those clients seeking to raise capital. Clients are most typically private, entrepreneurial-founded or family-owned businesses.

2. How are you seeing the market in 2020, who’s active, who’s acquiring and are there particular theme’s you are seeing play out?

The Federal Election in 2019 generated a “ripple-effect” that impacted a range of businesses and for many dampened the capacity to explore or complete transactions. This has caused a level of pent-up demand leading into 2020, with Prime Capital working with a number of parties seeking to revisit transactional projects in the new calendar year.

Whilst a tragic start to the year domestically with bushfires – and a continued volatile environment internationally – there continues to be significant levels of capital (particularly private equity) in the Australian market seeking quality investment opportunities – this will underpin a continued level of activity in the year ahead, particularly given limited IPO market activity.

3. On the capital raising front how are you seeing that?

Prime Capital, through both its involvement in the Investible Venture Capital (VC) fund, together with assisting a number of clients with bespoke capital raises – continues to observe a strong demand for capital raising support. Whilst there is also significant available capital available from VC and High Net Worth’s (HNWs), the market continues to be extremely selective of those businesses it will fund. Much of this is due to many portfolios in early stage yet to manufacture or return significant capital back to investors which can be reinvested. This tension, with broad demand for investment outstripping a very selective supply of capital, will continue throughout 2020 – and entrepreneurs will need to continue to work harder and smarter to attract desired investment partners.

4. How are you helping clients prepare for 2020?

Most relevantly, at Prime, we are working closely with our clients to monitor trends in their financial performance – and where possible helping them identify areas where performance can be optimised ahead of undertaking an prospective transaction. Preparedness is key and ideally commences well before the start line of any transaction.

In addition to the financial aspects, we pride ourselves on the personal nature of our relationships with clients and striving to ensure that any transaction is tailored to meet the objectives of all stakeholders and reconciles to achieving their “why” in undertaking a transaction.

5. Finally, can you run us through a few clients that the team are currently working on or just completed work for as examples of how you are seeking to assist clients?

We have just completed the sale of a large domestic software business to an offshore technology group backed by private equity. At the same time we are running sale processes for another two technology businesses, one of whom is a client of one of our accounting partners.

We are also preparing to take another two businesses in the industrial space to market in the first quarter of CY2020. Concurrently the team is also assisting a number of clients with their capital raising needs, particularly again on the software and technology fronts, extending also into food and beverage and consumer goods.

We are extremely grateful to all our clients and welcome the opportunity to explore how we may be able to assist others in the Prime network.

6. What’s your key takeaway for clients to action?

As above, preparedness and having an advisor who understands and can deliver against your “why” are very critical.

We are here to help and always welcome a discussion – and remember, a transaction may not occur for months or years post the initial discussion, however the most important aspect is to start the journey towards your objectives early.

The information in this presentation contains general advice and is provided by Primestock Wealth Management Pty Ltd (Primestock Wealth) AFSL No. 240277. This advice has been prepared without taking your personal objectives, financial situation or needs into account. Before acting on this general advice, you should consider the appropriateness of it having regard to your personal objectives, financial situation and needs.

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