Looking for opportunity in mergers, acquisitions and spin-offs

Corporate transactions have a mixed history in Australia, the mention of roll-ups brings bad memories of disasters like ABC Learning for investors. There’s a stark contrast in the fortunes of spin-offs like Orora, which has doubled since listing in late 2013, and South32, which at one point had fallen by more than half since spinning out of BHP. So how can investors catch the winners and avoid the losers? “You’ve always got to think about the motivation for the seller. You like to buy off a desperate seller.,” says Jeremy Bendeich from Avoca. When it comes to M&A, Simon Shields from Monash Investors suggests looking at the buyer “If they’re very similar businesses, a lot of cost can be taken out. If it’s a company that’s putting together some sort of conglomeration of assets, as we saw in the 1980s with all those entrepreneurs, I don’t think it’s a good idea.” Watch the video to see the latest thematic discussion.