Orchestrating a takeover or a merger is probably the last thing on the minds of most entrepreneurs right now.
Markets are in turmoil, confidence is down and budgets remain under pressure. Who’s got the time, the energy or the inclination to worry about launching a takeover right now?
Well, there are plenty of bargain hunters in the market at the moment and it might be worth keeping one eye on how they act in the coming weeks.
This week alone we’ve seen MYOB acquired by private equity firm Bain Capital, and share registry giant Computershare swoop on two smaller firms.
Foster’s remains the subject of a hostile takeover and there are rumours (which have been denied) that private equity firms are also running their rulers over Qantas.
The turmoil on global sharemarkets isn’t stopping takeover rumours – in fact, it’s made some Australian companies look so cheap that rivals and private equity firms are suddenly seeing some pretty amazing opportunities.
For example, Melbourne IT yesterday conceded that its lacklustre share price performance had made it vulnerable to an opportunistic takeover.
It’s important to remember here that Australian companies look particularly attractive to overseas raiders.
While our economy has slowed to a walk outside of the mining sector, things here are still in much, much better shape than in the US and Europe. If you are an overseas firm looking to get away from your struggling home market, Australia provides the perfect opportunity to do so – and to do it relatively cheaply.
This is particularly the case in the technology sector, where asset prices remain extremely attractive relative to the US, where this year’s little tech boom has seen valuations rise sharply.
Fast-growing SMEs need to be alive to this situation.
If they are looking to exit, the appetite of potential buyers might be better than you think – particularly if you can lure an overseas firm. Indeed, we saw this last week when US media giant ESPN bought local online community business footytips.com.au for an undisclosed price.
But if you are looking to expand, the opportunity to find a cheap acquisition or merger might be bigger than you think, particularly in sectors where baby boomer business owners are starting to look for the exits.
Certainly, a takeover right now requires cash and a good deal of courage. But it is crucial to keep these sorts of opportunities in mind in a market where bargains are available.
James was the editor and publisher of SmartCompany and LeadingCompany for five years. He is now the Australian Financial Review‘s companies & markets editor, and a former BRW editor.
