December 20, 2016
It’s often said that South Australian businesses look to the east coast when seeking capital to grow local companies, but merger and acquisition activity in 2016 suggests there’s a growing appetite to mobilise locally-based capital into businesses that can create economic opportunities for our state.
“There’s been a definite shift in recent times,” Kain Lawyers’ Director Gerry Cawson said.
“We’re seeing more local companies and entrepreneurs willing to re-invest into SA-based businesses, leading to more ‘buy-side’ transactions than we’ve seen in recent times in SA.
“And while this is unfortunately off a low base, with SA following the national trend of fewer deals this year overall than last year, it hasn’t deterred those local businesses from looking to grow through acquisition.”
Mr Cawson notes that a number of SA-based health and medical companies have taken advantage of macro-economic factors creating deal flow. He cites transactions such as the acquisition by listed company Xped (originally founded in SA) of JCT Technologies, a locally-based company in the medical technologies sector.
“In addition and back in January, we completed the sale and licensing by Cytomatrix Limited of its stem cell technology to Nohla Therapeutics in the US and followed this up with the completion of the investment into locally-based The Pipette Company by US-listed medical device company, Cooper Medical.
“While the driver in M&A activity this year has certainly been mid-market companies such as growing family- or privately-owned businesses, the activity has extended to the big end of town also,” Mr Cawson said.
Examples of public deals which can be disclosed include the work Kain Lawyers’ Director James Burchnall and his team undertook in February to assist the locally-based Sealink Travel Group to acquire the Captain Cook business in WA. The deal reunites the entire Captain Cook business and underpins Sealink’s position as one of the leading travel and tourism companies in Australia.
Mr Cawson’s fellow director Michael Garry further highlights the activity that he’s seen, particularly in the areas of property and infrastructure assets and food and agribusiness assets.
“They’re all active sectors of the SA economy that have seen significant deal activity this year,” he said.
Mr Garry, who specialises in private company acquisitions and funds management transactions, led the team that advised Inheritance Capital Asset Management on their acquisition of an interest in Westpac House while Associate Director Brian Vuong assisted construction and engineering company Ahrens to add to its stable of 2015 acquisitions with further acquisitions this year.
Mr Garry also has a particular focus in the local agribusiness sector and notes that while the most high profile transaction in the sector this year was the sale by S. Kidman & Co, there were plenty of others of significance.
“We’ve been active on a number of valuable deals involving growing SA agribusinesses looking to scale their operations through ‘under the radar’ acquisitions and taking advantage of the competitive edge South Australia holds in food and agribusiness production.”
Looking ahead, both Mr Cawson and Mr Garry see a significant increase in the pipeline of prospective deals for 2017 and are hopeful that there will be even more opportunities for SA-based companies to grow through acquisition next year.
About Kain Lawyers
Kain Lawyers is an innovative legal consulting company specialising in complex transactions, disputes and advice. We create opportunities for clients by delivering agreed outcomes, on time and on budget – without disrupting their business.
Kain Lawyers has one of the largest transaction teams in SA. The team is led by Directors John Kain, Gerry Cawson, James Burchnall, Michael Garry and Sarah Chia. They are regularly rated as ‘top tier’ by legal guides such as Doyle’s Guide and Best Lawyers and in 2016 Gerry Cawson was named ‘Best Lawyers M&A Lawyer of the Year in Adelaide’, a peer voted accolade.
The team acted on deals valued at over $500m in 2015 and in the year to date are ranked by Thomson Reuters in the top 25 M&A legal advisory teams in the Australia on deals less than $500m.