2022 Year in Review

How was it in 2022?

While some offshore markets saw a marked decrease in M&A activity during 2022, especially in the second half of the year, transaction volumes remained robust in New Zealand. This was driven by continued strength of financial sponsor activity backed by record fundraising volumes over the past 24 months, ongoing elevated levels of infrastructure investment, the continuation of succession motivated transactions and the relative perceived strength of the New Zealand economy.

What's to come?

2023 promises to be an interesting year, both economically and in M&A terms. We expect to see a continuation of the current economic headwinds as relatively high interest rates, inflation and tighter labour markets predominate, at least for the first half of the year. However, high levels of “cash on the sidelines”, including several financial sponsors seeking to invest recently raised funds, robust corporate balance sheets and a number of cashed-up family offices should drive substantial deal volumes as opportunities arise.

On the sell side, we expect succession to continue to be a theme alongside the natural cycle of financial sponsor exits. Given adverse conditions in certain sectors, some companies may seek to exit non-core operations or investments. Other companies may find themselves in challenging territory as the impact of higher rates and restrained consumer sentiment is felt, resulting in increased restructuring activity, including some accelerated transactions. By contrast, we expect stronger performance from New Zealand’s rejuvenated tourism sector and increasing economic stimulus from the re-opening of China, the positive impact of which could be underestimated.