M&A deals remain subdued despite spike in value, data reveals

New research from Pitcher Partners has revealed that the sharp rise in acquisition costs may make smaller businesses less attractive to buyers as new competition laws come into play.

The accounting and advisory firm conducted its dealmakers mid-year pulse check, which found that deal volumes had remained subdued over the first half of 2025, even as transactions had become more valuable.

According to the firms’ mergers and acquisitions team (M&A), deal values had more than doubled in comparison to the same period last year, with $97 billion having changed hands.

Despite the lack of deals having occurred over the past six months, the firm predicted that this would change over the second half of the year as the new Australian Competition and Consumer Commission (ACCC) regulations started to kick in, forcing companies to notify the ACCC of corporate transactions.

Andy Hough, Pitcher Partners corporate finance partner, said the new regime would be likely to drive up dealmaking volumes ahead of 1 January 2026, when it was compulsory to report transactions.

Hough said exemptions could be sought for companies with revenue under the $10 million mark; however, realistically, every mid-market business would fall into the net.

“I would expect there to be a flurry of deals trying to be completed before the new ACCC rules kick in on 1 January, because it will be a month-long process of approvals if they are caught up in it,” he said.

Earlier this year, Hough told Accountants Daily and Accounting Times that the M&A market outlook was “cautiously optimistic”, as dealmakers could be significantly impacted by the rapidly evolving market.

According to Hough, this had now been demonstrated in the recent spike of deal values, as it highlighted a new problem for businesses at the smaller end of the value band.

“There are a lot of good smaller businesses which might be doing $10 million in revenue and a couple of million in EBITDA. But for buyers, they're not going to be that excited from a numbers perspective because that doesn't move the needle, the pain of actually doing a transaction is probably not worth it,” he said.

“When you consider buying a $10 million turnover business or a $100 million turnover business, the amount of effort to do a deal is probably not so dissimilar. With the opportunity cost of spending 6 to 12 months working on a deal, advisory costs and now the new ACCC costs, you question if the smaller deal is worth it or is it better to just do the bigger deal.”

Another element of concern within the deal market flagged by Pitcher Partners was the impact it would have on succession planning, an area where most businesses already lacked a strategy.

Hough said the new ACCC regime was also likely to “spell danger” for the retirement plans of founders and owners of many profitable small and mid-market businesses.

“It’s no longer a question of what your business is worth, it’s a question of whether or not it’s saleable. There are going to be a lot of businesses out there that actually make money, but no one wants to buy them. These businesses haven’t invested in systems and processes, are too dependent on the owner, and may have seen a little bit lax with their compliance,” he said.

“They might have made additional profits along the way but the question is, have they got themselves a saleable asset? In many cases, the answer is no.”

For the remainder of the year, Hough predicted that Japanese equity firms were set to play a central role in investment within Australia.

“There has been a real spike in Japanese investors’ level of activity in Australia and I think that will continue to grow. Japan will be an active player, partly because the yen hasn't deflated as much against the Australian dollar as it has against other currencies, and partly because they are now being forced to by activists,” he said.

“We've got stability that other markets don't have, and given where valuations are sitting, I think we'll see an increase in the level of cross-border deals and foreign buyers into Australia.”