Pitcher Partners says smaller firms to profit from mid-market M&A

Research shows small and medium-sized accounting firms are set to capitalise on strong mid-market M&A activity, with the big four focused squarely on billion-dollar deals, says Pitcher Partners.

According to the Dealmakers: Middle Market M&A in Australia 2015 report, produced by Mergermarket and Remark in collaboration with Pitcher Partners, middle-market M&As increased by 21 per cent in 2014 with transactions between $13 million (US$10 million) and $64 million (US$50 million) accounting for two of every five deals.

Simon Johnson, principal of corporate finance at Pitcher Partners, said this has created an environment in which small and medium-sized accounting firms can play a major role in a large range of M&A transactions.

Mr Johnson said mid-tier and smaller accounting firms are in the “box seat” to advise on mid-market M&As.

“What we find is that the big four are very much geared up towards assisting large corporate clients… the big four accounting firms worry about billion dollar deals,” he said.

“If our research shows anything, it’s that small and medium-sized accounting firms have more intimate relationships with their clients, are more aware of the strategy of their clients and the personal aspirations of the founders or the owners and as a result are in a much better position to be advising on these (mid-market) sorts of deals.”

Mr Johnson said the type of firms that have been active, or are expected to become active in the M&A market, are typically those working with mid-tier or smaller accounting firms.

“They’re all represented by firms like Pitcher Partners and other smaller local accountants," he said. 

To capitalise on this opportunity, Mr Johnson said accountants need to be proactive in implementing M&A strategies for their clients, with early planning essential for the best results .

"There’s no reason everyone can’t be having a discussion around proactive buying and selling and business value,” he said.

“For accountants, it means that you should be having proactive conversations with their clients around things like succession planning.

“If there’s anything we've learnt and we’ve tried very hard to communicate in this report is that those businesses which are looking to sell, those who are prepared and have been preparing for more than a year in terms of getting their business attractive and ready for a sale, they’re really going to benefit, come purchase price time.

"They’re getting a premium in the market,” Mr Johnson said.

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