Deal Talk EP1: Global M&A outlook 2026

[MUSIC] Hi all and welcome to the first episode of our new DealTalk Podcast. This podcast is going to be focused on key M&A issues in Australia and around the world. Many of you already read our deal talk newsletter and now you can also enjoy our market learning M&A insights in our podcast form. How lucky are you? I'm Mia Hosenkulf and M&A partner in the HSF Crime Archorporate team in Sydney. And while you'll definitely be hearing my voice again, this podcast will be showcasing insights from our amazing group of partners in M&A and other specialist teams from Australia and beyond. Speaking of fellow amazing partners, I'm joined today by Jeff Kerrigan and Lillian Yo, two of my fellow corporate M&A partners in Australia. I'm Mia. I'm Mia. Hey both. So today we're going to launch our new DealTalk Podcast with insights from our recently published Global M&A Outlook for 2020-26. This Global M&A report takes a look back at some of the key insights from 2025 and also looks ahead to what we expect to see for the rest of 2020-26. I'm still in complete shock that somehow it's already much. So maybe looking back at what we saw in 2025. Jeff, could you maybe tell us a little bit about what we saw in the M&A market around the world over those past 12 months? Yeah, sure, we're happy to. So yeah, if you think back to the start of 2025, which seems like quite a lifetime ago and a lot has happened between now and then the general outlook at the start of 2025 was it coming off a slightly sluggish level of M&A activity in 2024 that would be a bit of a rebound. All the macro indicators were looking positive inflation and interest rates or heading in the right direction. But as the title of the report suggests hanging out situation ships and going official it's complicated much like modern dating in some ways. It was a bit more nuanced than what the strong macro effectors might have suggested. And Jeff, I'm just going to briefly interrupt to say I actually went out to my team and said, is it too geeky for us to call this situation ships and they all approved? I think, you know, living and breathing, dating in 2025-25-26, they saw the parallels. And all disclosure exposing our age, Jeff and I both had to google it. Yes. I knew what it was, so who knows. So what the data showed in the end at a global level was, I said it was a tale of two halves. So the positive energy that started the year didn't really lead to announced and launched deals in the first half. If you turn your mind back, there was quite a lot of uncertainty to navigate during that period. The revolving run of tariff announcements and adjustments and windbacks and broader geopolitical uncertainty, which really led to the situationships where parties wanted to do deals in the first half of the year, but they were struggling with the level of dynamic activity in the macro market. But then that macro trend probably settled down a bit in the second half of the year, which then led to a really strong run of deal-making from Q3 onwards, which actually was one of the strongest quarters since 2021 in terms of total deal value. And where we ended up really was that it was a relatively strong year in terms of deal value. So you have $4.3 trillion, which was up 40% on the previous year. But the volume was down, which really shows if you pull through the data that the mega deals were doing the heavy lifting, particularly at a global perspective. And if you think of some of the valuations that were achieved in 2025, that would be consistent with that. So I think the end result was, is that 2025 was strong, but a tale of two halves and a focus on value. And I loved, I think one of the stats I read in our report, which is full of super useful stats and numbers and breaks down things across jurisdictions and sectors. So absolutely, listeners should should look that up if they've not already seen it. But my favorite stat was that 2025 was second only to 2021 in deal value over the last decade, which that's a big year. But actually one of the lowest for deal numbers, which I think checks out for those of us who lived through that slightly patchy first half of last year. So yeah, definitely an interesting year. And I think one thing it's probably worth acknowledging is our report does a really great job of looking at global trends. We leverage our leading MNA practice around the world to kind of pull insights together. And so that kind of experience of a bit of a patchy year and then more busy year at the back end is definitely true. But obviously these are generalisations. And so there were to just call out some outliers where the whole year was gangbusters. They were up on deal numbers. They kind of don't really fit into that narrative. I mean, some of those countries included Brazil, Hong Kong, Indonesia, our team there has been busy and pretty nonstop for, you know, as long as we can all remember. And as well as Japan, which has really been booming. So, so again, the global insights are great, but also worse calling out that some of them are generalisations and there will always be outliers. So maybe Lil just jumping to you off the back of some of those stats that Jeff has called out around what 2025 looked at. What was some of the, guess, more trends in behaviour and deal execution that we saw over 2025? Yeah, from what you said earlier, patchy is something that certainly we saw a lot off in the PE practice. People were busy looking at things, but there weren't that many deals that actually transacted. There was also sort of a slight dominance by statistics in, you know, most of those mega deals in 2025. We obviously saw some big ones from PE shops, but a few of them actually went ahead. I saw somebody say that in times of uncertainty, corporates flee to scale, you know, it's just like don't do anything too bold to just get bigger. And I think we really saw that in some of those big corporate transactions. Yeah, definitely agree with that. I would say PE was still active, as I mentioned, but globally we saw sort of PE plays probably focusing a little bit on managing portfolio companies, recycling capital to also just assist them whether the challenging business environment that was the start of last year. I know everyone says it, but we are actually sort of expecting a big upswing in PE activity this year, as PE firms look to get investments to market. As we look at the landscape of aged assets in people's portfolios, people just need to actually sort of start getting rid of them from their portfolios. And also for funds, we've seen a lot of fun raising over the last year or so. So people are looking for assets to transact on. In 2025, we also thought of continuation of the heavy lifting needed to get deals done, as mentioned, time tables were a lot longer, in part because negotiations were taking longer. I think probably all operators have lived that in 2025. No, exactly. And we hear about the valuation gap between Bion and seller that came to for a lot last year. So people were having to get a lot more creative, trying solutions and to risk their transactions. So I don't think that necessarily means that deals are more contentious. Positive note, we were also seeing a lot more sort of collaboration between parties because they're working together to actually try and get a deal done. And you know, just meant that people had to be a lot more creative. In one of the things, just to jump in one of the things, I always say, people that I love about M&A, like I'm a lover, not a fighter. And it's like that thing of whilst even when parties aren't aligned on individual issues, which obviously is often the case, people want the best outcome for their own side, there's kind of still that overarching drive to get it done. And I really do feel particularly in and amongst. And I know we'll get to this, but increasing regulatory focus, geopolitical complexity, some uncertainty, people are really thinking it's in everyone's interest to get the deal done it. And let's try and make sure that we set ourselves up for success. As I said, the part of me that doesn't like to send mean letters or BScary has really enjoyed that training market. And just picking up your point about sort of regulatory risk as well, we do see that that is going to probably be one area of focus and something that, you know, all deal doors will need to navigate and work together to solve in the next little while. So I think it's better to say that the global direction of travel is towards an increased amount of regulatory oversight on deals. And I think it definitely ties into that point you made earlier around timetables going out and, you know, not to be alarmist, we do always say time kills deals. So I think really proactively at the outset of a transaction, thinking about what you're going to need, how can you manage timing? I will say although we are seeing greater regulatory oversight and a lot of foreign direct investment approvals being required, great merger control, you know, extraterritorial jurisdiction and so on, I will say a near cautiously optimistic. Many of the regulators are, I find working towards tighter timeframes and kind of will meet them, provided you're kind of giving them everything you need. And part of that is about preparing for that process upfront, making sure you're ready to go and you're not ending up with really the driver of timetable being outstanding record approvals if you can manage that up for, but really having to spend I think proactively focused on that earlier in transactions. Definitely. And I think on that point, sellers bring assets to market and thinking really deeply and, fortunately, ahead of time about what regulatory interest there might be and trying to presoft to the extent or pre-engage regulators, I think is pretty critical on a lot of deals. Yeah, exactly. Okay. So having looked back at some of those more global trends that we saw in 2024, 25, I'd like to switch tax Idle to talk about what we saw maybe in Australia, specifically. And kind of what we think recent experience and courage event means for M&A in Australia in 2026. So a little maybe any thoughts you've got. Yeah, I'll jump in. I mean, I think Australian M&A was still relatively resilient when you compared to what the global trends looked like. And I think a lot of that was because M&A was still dominated by domestic bidders. So I think the starting out report is that more than 60% of deals by value and two thirds by number with domestic bidders and the US dominated sort of foreign bidders. Consistent with some of our global trends deals were increasing. We've discussed earlier and bidders had to adopt more flexible structures, such as dual skins and takeovers that we saw here and also to manage the prevalence of large passive holding, so super funds. And I think that's one of that point about shareholders playing an increasingly active role in public M&A transactions and kind of roles of activists. Shareholders is something that we touch on in the report and there's some really great insights that delve into deeper that we, you know, I do recommend people go and have a look at that. One thing we would say in Australia is the kind of framework of our compulsory superannuation scheme, which has led to significant amounts of money in those super funds who are increasingly playing a kind of more active role in transactions. And it does mean I think that we here are a little at the forefront of how to manage those shareholders and provide flexibility in transaction structures so that you don't, I guess, get held hostage to two kind of anyone shareholders' requirements. So I agree, I think it's definitely something we saw last year and Australia really is leading in that space. And that's another observation from something we worked on last year and kind of really knowing the register, like even as a bit of like who on the register and sometimes it's a small share holding, but has a oversized voice like, you know, the other shareholders, both funds and retail will follow if some of these are leading lights on the register. If you can get them to speak out and come out in support, I think that can be very powerful Yeah, it's true. And then you kind of go, you know, we could get distracted and start talking about truth in takeovers, probably for another 20 minutes, but there's been again, a really some interesting trends here in ours. And I know we've written about that. So if that's something listeners are interested in looked that up because there's been some fund developments in 2025 in ours. So I think maybe thinking again about ours and what we saw last year and how that compares to some of the global trends, I think the piece we talked about of the increasing reg focus definitely prevalent here. I mean, number one topic on many M&A lawyers. Mine has been the newer derailles gene, but obviously early in that, but that did kick off towards the back end of last year. And you know, really it's a big change in how mergers are going to be looked at by the age of a C here. A few other things for obviously continuing to be very relevant to almost all of our transactions or not all, but what was your stat level 60% are domestic bidders, but kind of even then you can depending on what your upstream looks like, you can still have a verb. And obviously I kind of watch this based on on what ASX is going to do around shareholder approval requirements for full listed bidders issuing script. I think that will be one to see what happens in 2026 because definitely increased focus on that. So maybe kind of having looked at some of those, I guess legal trends. What I would also be really interested in is what did we see in terms of sectors in ours last year? What was busy? What did you see in your practice last year? Yeah, sure. So probably to introduce myself more fully. So I'm based in Perth. So the predominate, the work that I predominantly do is in mining and resources. And yeah, we had a busy year. Last year, I think again, the gold sector served us favourably. So we had three quite large deals in the gold sector. So gold fields, remelius and predictive discovery. And that's all the combination of high gold price environment and consolidation. I think the sense on our side of the continent is that may have reached its peak. But we are seeing a lot more uptick in interest in other critical minerals. So so lithium, there's been price improvement. And I think the big trend for the C or BA government's are starting to put real money behind this. I mean, they're looking at various forms of whether it's price floor, so commodities, export, credit lending into projects or taking direct equity investments in real critical mineral deals. We're seeing real government involvement has kind of moved from just talking points to actual capital. So I think that will be a really interesting sector to be involved in in the year ahead. One other one is I think we're also seeing companies looking at their portfolios and really seeing where they might be in value. So I think they're the creativity in BHP selling down half of its WAI and all power assets to GIPE shows that there was a Yoshi's valuable asset sitting there in the PILBRA and get they've managed to through an innovative structure. I realize real capital return on that. I think that will now perhaps be a playbook for other miners to look at what assets they've got within the portfolio that they can realize daily for. Everyone loves to see when somebody else gets a payday. How do we get one to? That's great. So maybe, and Jeff, you've kind of already started us down this path of kind of thinking about those developments and then what we saw in 2025. I guess the next obvious question is what do we think all of that means for the rest of 2026? I mean, since we've wanted to report at the start of the year, obviously a lot has happened in the world. Obviously, it's been the conflict in the Middle East, which has caused a great deal of concern for both the people there, but also the downstream economic impacts as well. And I think in a way that does bring us back to where we were in some ways at the start of 2025, where macro uncertainty was at a very high level and again potentially introducing caution for doing deals, but then we'll probably also draw back to some of those core focuses on supply chain resiliency access to key commodities and minerals and infrastructure, things that have been a focus for the last two to three years. Those things are somewhat amplified in more of a contested and conflict scenario. And I think again, get in that overall global context. How Australia will continue to be seen as a relatively safe and stable jurisdiction for foreign investment? From my end, I'm going to say something really groundbreaking that you've never heard of before, which is we expect P to be busy this year. And you're not at all biased, little, and not about P. That's not at all. But if we do look at the bigger exits that tried to happen last year, that people said you took the assets of the market, we think that they'll look at different ways that can bring you back onto the market this year. As also, as I mentioned, there are a lot of more aged assets that are probably coming to that maturity level where P's are probably looking at getting rid of those. There's increased pressure from the middle of the partners as well. So I do expect that they'll be a greater exit pipeline in 2026. And we also think another trend that will happen as sort of bigger and bigger assets come to market is that there will be collaboration between sponsors and corporates to compete for the price assets together. We're definitely seeing a lot more consortium bids out there and you know, it really enables either people to kind of come up with the funds more easily or even kind of divide assets that might not no longer make sense together. But nobody wants to deal with the kind of vital and sell later if you can do it up front. It simplifies that process. Exactly. And it sort of plays to the point we talked about earlier, which is people are just getting more creative and trying to get deals away. One other thing that I think there'll be increased scrutiny on is regulatory conditions, as we head into the years, especially off the back of the outcome of Maine and Kizat this fall and then sort of what played out there. Yeah, and that's a great shout out, Lil, as we're planning to release an episode of the Deal Talk podcast discussing some of the key takeaways from this Supreme Court's decision in Maine and Kizat. So watch this space. I think there's going to be some really interesting implications, great takeaways around transaction structuring and kind of what to think about in your document drafting. So keep an eye out for that. And if you're interested in that episode and what is going to be hopefully many more interesting M&A trends and takeaways, do subscribe to the podcast so you'll keep up to date with all the episodes. We'll also make sure you can access it through the Deal Talk newsletter and various other publications. So never fear you'll be able to find us. But Jeff, Lil, just want to say thank you so much for your time today. It's been super great to look back at the things we learned from 2025 and how that's likely to shape M&A in Australia and more globally in 2026. Thanks for having me. Thank you, Mia. Thanks, Jim. And final plug. I forget to, if you haven't already read it, go have a look at our Global M&A report. Hanging out, situationships and going official. It's complicated. Some of the detail here, but it goes into a lot more detail on other trends, which were super interesting. Okay. Thanks all.