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19 August 2022


Global Merger and Acquisition (M&A) deal flow in 2021 was unprecedented. A record US$5.9 trillion in M&A deals were recorded, with volumes in most major capital markets almost double those of 2020. Deal flow surpassed records set in 2007, making it the largest year in M&A deal making.

On the back of this public market M&A deal flow, Morrow Sodali saw strong demand for its services, acting as proxy solicitor and governance advisory on a record 225 M&A transactions and providing advisory services in 58 activism campaigns, up 23% year on year.


Despite major geopolitical and macro-economic headwinds leading to equity market volatility, global M&A activity in H1 2022 has been resilient, according to analysis of M&A data by EY. With 2,274 deals of a total value of US$2.02t, M&A in H1 2022 may have seen a drop compared to this time last year (down 27% by value and 18% by volume), but activity is up compared to the average of the last M&A cycle (up 35% and 13% respectively).

The last 12 months has seen Morrow Sodali (APAC) involved in approximately US$85 billion worth of deals, including the acquisition of Spark Infrastructure by a consortium led by KKR, PSP and OTP, the Santos-Oil Search merger, the buyout of Afterpay by Block (Square Inc), the recent acquisition of Crown Resorts by Blackstone, while this year’s activity has seen our involvement in the biggest all-cash deal in Australian history, the $23.6 billion takeover of Sydney Airport.


One key thematic that has arisen in these transactions, and trends we are seeing across deals our firm is involved in globally, is the role that global event funds have played in the vote outcomes. Typically, we see an increase in merger arb funds moving onto the register of a company post deal-announcement.

While expected, this movement of shares actually increases the risk of a deal not proceeding because typically the merger arb funds do not participate in the vote or hold their position through a swap, which is un-votable unless it is converted. As a result, if a dissenting campaign emerges during the process ahead of the Scheme Meeting and an increased percentage of votable stock is held by merger arb funds and can’t be voted, then the overall universe of shares that can be voted decreases, making it difficult to meet the voting thresholds in the case of a scheme.

The ASX has been a happy hunting ground for the merger arb funds of late with very strong results at Sydney Airport, AusNet and BHP Group’s unification. However, had Morrow Sodali not been tracking the position of merger arb funds ahead of some of these votes and actively engaging with this investor cohort to get them to convert swaps into votable stock then the result could have been very different.

Secondly, is the continued rise of both private equity, sovereign wealth funds and Australian super funds who are still on the hunt for quality infrastructure and assets, including deals where they can participate in consortiums such as those behind the recent Sydney Airport and Spark Infrastructure and Crown Resorts deals.

Despite the widespread uncertainty, a fragile global economy and increased regulatory intervention, we are seeing across our global operations a strong flow of private capital driving activity. Even though capital market conditions have tightened sharply through the first half of 2022, private equity firms still have large amounts of cash that will need to be deployed in the latter half of the year.

Thirdly, we have observed over many years a rising trend in the role that retail investors play in achieving deal outcomes. Retail shareholder apathy has always been a challenge to deal completion, especially in achieving the headcount test threshold at a Scheme Meeting, however similar to the rise of ESG conscious institutional investors, we are seeing the rise of the ESG conscious retail investor wielding its power.

In some recent transactions, we have witnessed retail investors assessing the merits of a deal and their support both on value, impact on future dividend income, as well as the ESG merits and rationale of the transaction and the longer term impacts that would have on the company, its assets and its social license to operate.

The proliferation of ESG is being adopted as a key plank in activist campaigns and strategic attacks, and this is no longer the domain of a small cohort of ESG-focused players, the more traditional activists and investors are now also incorporating ESG into their campaigns too.

So building our expertise in ESG due diligence related to M&A transactions has been a key focus for us, as well as in supporting companies through the annual cycle of their investor relations more broadly.

Those companies who have clearly articulated their ESG initiatives in their disclosures, report on performance metrics and who consider ESG impacts as part of the overall deal are at a strategic advantage to achieving successful completion.


Our embedded ethos, excellence in everything we do, is what stands us apart from our competition and this embedded ethos will see us continue to advance our thinking on shareholder insights, stakeholder engagement and ESG well into the future.

It is this ethos that has driven our M&A and governance advisory teams to achieve an unmatched record of deal execution ranking number one in The Deal & Merger Market’s Global M&A Advisor rankings for 2020 and 2021 and has seen us recognised by Bloomberg as one of the leading US and Asia Pacific Company side Activism Advisors. Refinitiv, has also ranked Morrow Sodali the top Global Proxy Solicitor in 2021 for shareholder activism situations.

In M&A situations, the types of services we provide typically include shareholder research and perception studies; register analysis; shareholder engagement and solicitation; as well as advice and support on corporate governance, disclosure and proxy advisor engagement.


The first quarter of CY22 saw a number of M&A deals completed that had been announced in 2021, contributing the frenetic pace of transactions. However, since then we have seen a slow down in M&A activity in 1H 2022 which reflects the impact of geopolitical and macroeconomic conditions that now face deal makers.

Along with a tightening financing environment and geopolitical tensions on numerous fronts, increased regulatory scrutiny on deals - particularly in the tech services sector - could contribute to further slowing down M&A deal activity. The inability to agree on pricing witnessed in some transactions, resulting in reduced bid offers, is also hampering dealmaking.

Although M&A activity is off the record levels of activity in 2021, both the number of deals and their total value is still above pre-pandemic levels and we expect that this normalisation to continue for the balance of 2022 and into 2023.

We also often play a key role in facilitating companies’ conversations with institutional investors. Having worked with them across many transactions over the years, we have well-established relationships of trust and credibility with the international investor community that we can leverage, as well as a proprietary database on how they’ve behaved in similar transactions in the past.

The past two years have been a period of rapid expansion for Morrow Sodali’s Sydney-led APAC division, with several hires and the opening of new offices in Hong Kong, Seoul and Tokyo.

Both here and globally, Booth says the firm has been investing heavily in staying ahead of the curve by expanding its team of in-house corporate governance and advisory professionals to include more ESG experts and former proxy advisors.

Last year really put a magnifying glass on ESG risks and opportunities off the back of Covid, and it’s a key theme that we’ve seen emerging recently at company AGMs, as well as in M&A and activism, he says.

There’s been a really rapid proliferation in the adoption of ESG as a key plank in activist campaigns and strategic attacks, and this is no longer the domain of a small cohort of ESG-focused players, the more traditional activists are now also incorporating ESG into their campaigns too.

So building our expertise in ESG due diligence related to M&A transactions has been a key focus for us, as well as in supporting companies through the annual cycle of their investor relations more broadly.

The Afterpay and Sydney Airport deals and the other significant transactions we’ve been involved in recently demonstrate the trusted advisor position that we’ve built, both here in Australia and APAC as well as globally, and we’re constantly enhancing our skill sets to ensure we remain best-in-class.

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