RSM’s 2021 Control Premium Study - a study of 605 successful transactions and schemes of arrangement in Australia and 131 in New Zealand, completed between 1 July 2005 and 31 December 2020.
Median Control Premium by Industry Sector
Industry sector significantly influences the control premium required to complete a successful transaction.
Our analysis shows sectors that are traditionally priced and valued on upside potential revealed significantly higher control premiums (such as metals and mining, energy, healthcare, and telecommunications, IT and software) than those where valuations are more typically limited to asset base (e.g. real estate and financial institutions).
Median & Average Control Premium by FY & CY
The Australian market has experienced a number of economic cycles over the 15.5 years analysed, including the mining boom, global financial crisis and more recently the COVID-19 pandemic..
The graph shows the impact of these on observed control premiums, with variability in the S&P/ASX 200 Index and periods of global uncertainty impacting buyer behaviour in the Australian market.
Control premiums have risen during COVID-19 to record levels of around 50% driven by strategically opportunistic deals in healthcare, metals and mining, and diversified financials.
We acknowledge the input and support we have received from Curtin University’s Dr Lien Duong, Dr Baban Eulaiwi and Professor Grantley Taylor, and Victoria University of Wellington’s Associate Professor Thu Phuong Truong in the completion of this study.