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Mining sector sees changing M&A environment

The mining and metals industry is one of Australia’s biggest, however, the recent slowdown in demand has negatively impacted their financial health. With the risk of financial crisis, companies are looking to divestment and thus experts in legal jobs1 to help drive growth and stay compliant.

Mining deals dropping

According to a recent report by Ernst and Young2, the mining sector will see considerable changes to the M&A landscape in 2016. Specifically, divestments will rise due to financial distress and the ambiguity relating to any future recovery.

The report A new normal, or the bottom of the cycle?

Mergers, acquisitions and capital raising in mining and metals, 2015 trends and 2016 outlook shows that following the fifth continuous year of both dropping deal value, the surging amount of financial problems will lead more and more companies to seek cost-cutting strategies, such as divestments and takeover bids.

However, this does not spell the end for Australia’s economy. A recent PricewaterhouseCoopers report3 showed that digital technology could drive up productivity and increase GDP by $37 billion in 2024.

How will this affect legal recruitment?

One important point that was raised in the Ernst & Young report was was that due to the high number of assets, lack of fiscal capital, restricted demand and an environment that encourages fire sales, companies need to get divestment right even for the most attractive sales to go through.

EY Global Mining & Metals Transactions Advisory Leader Lee Downham said that because of market conditions there is a need to accumulate and communicate insightful information to potential buyers. Through transparent information delivery, divesting companies can deliver confidence in sustainability.

“Similarly, anticipating transaction risks such as separation and regulatory and joint venture approvals take on greater importance in this market.

Prospective buyers are thin on the ground and they will reduce valuation, or even walk away, if these issues aren’t adequately addressed,” he said.

In response, companies may seek out talent through legal recruitment in an effort to capitalise on the potential increase in divestment opportunities.

If you would like to know more, talk to JLegal today.


  1. ^ experts in legal jobs (www.jlegal.com)
  2. ^ report by Ernst and Young (www.ey.com)
  3. ^ recent PricewaterhouseCoopers report (www.pwc.com.au)

Read the original post: Mining sector sees changing M&A environment

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