Australia’s small and medium-sized business sector continues to present significant opportunities for both buyers and sellers in the mergers and acquisitions market, defying some of the broader economic uncertainties, the latest Grant Thornton Dealtracker indicates.
While the total number of mergers and acquisitions has seen a slight dip compared to the previous Grant Thornton report, reflecting the persistent volatility and uncertainty gripping the global economy, the sustained and robust activity within the small and medium enterprise (SME) space underscores the underlying resilience of the Australian M&A market.
The Grant Thornton report highlights that despite the headwinds of inflationary pressures and ongoing cost-of-living concerns, which have demonstrably impacted consumer spending and business confidence in various sectors, the SMB segment continues to offer compelling prospects for both those looking to strategically acquire and those seeking to realize value by selling their businesses. This sustained interest in smaller enterprises suggests a fundamental strength in this segment of the Australian economy, potentially driven by factors such as innovation, niche market positions, and the adaptability often found within smaller organizations. The report implies that while larger deals might be subject to greater scrutiny and caution in the current climate, the SMB market remains a dynamic and active area of transaction.
“We expect deals to soften in the short term due to continued market uncertainty and global economic volatility, and expect deals to continue to stabilise in the next 12 months,” said Jannaya James, Partner – Corporate Finance at Grant Thornton Australia. We know there’s still IM capital available to be deployed, albeit cautiously, as IMs are invested in quality growth opportunities. We’re however unlikely to see a return to the levels of IPOs observed historically, due to the current volatility in the markets.”
Grant Thornton 2025 Dealtracker snapshot:
- Decrease in level of deal volume: While there was a rebound in deals from the first six months of CY2023, the final quarter of CY2024 saw a deterioration of deals off the back of global economic uncertainty and geopolitical challenges.
- Inbound acquirers increased their focus on Australia: Overseas purchasers comprised 36 per cent of transactions, up from 31 per cent in the prior period. While inbound deals faced headwinds in terms of increased regulatory scrutiny, the stabilisation of the Australian economy and political environment over the period coupled with a lower Australian dollar encouraged resilience in international investment.
- Investment Managers increased activity: The last 18 months saw a significant uptick in Investment Managers (IM) activity over the period as IM sought to deploy accumulated capital. IT returned as the dominant beneficiary of IM investment as following a number of exits, IM looked for quality growth opportunities.
IPOs continued to decline after three years of falling numbers of listing post-pandemic. Listed equity markets were unattractive, particularly in the Materials sector which had previously dominated IPOs, due to commodity price pressure and ESG priorities. Small and medium-sized businesses continue to be favoured targets for acquisition, with a high proportion of deals having transaction values of less than $100m. The findings from Dealtracker 2025 showed the median deal EBITDA multiples increased to 8.3x, which was above the long-term average of 8.1x. This is a result of overall increases in the median value of multiples across various sectors, while being offset by decreases in industrials and IT. The US and Canada continued to lead Australian acquisitions, followed by European and Asia-Pacific buyers. US and Canada inbound dealmakers contributed 245 deals or 43 per cent of deals, with European acquirers comprising 211 deals or 37 per cent of deals. Asia-Pacific buyers increased over the period, with 17 per cent or 96 deals (up from 70 deals in the previous period).
The 2025 Dealtracker covers transactions during the 18-month period from 1 July 2023 to 31 December 2024. This survey is limited to going concern business sales, excluding those with a significant real estate nature. Grant Thornton’s Dealtracker was first released in 2012 and – now in its 10th edition – has over a decade’s worth of deal activity and analysis to report.
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