E&Y survey moots M&As in low-growth environment

According to a new Ernst & Young (E&Y) report, nearly half of all Australian companies believe they are in a well-structured financial position and could make the preparations to acquire another business within 30 days if necessary.

However, the report's author, E&Y partner warns of businesses falling in a low growth environment as they appear to be not active in looking at growth through mergers and acquisitions.

The first annual Ernst & Young Capital confidence barometer has revealed that close to 25 per cent of companies across the world are likely or highly likely to acquire other companies in the next six months, but that number jumps to 29 per cent for Australian companies.

According to the survey about 49 per cent of Australian companies expect the impacts of the financial crisis to be felt over the next one to two years.

However, Greame Browning, the report's author and Ernst & Young Oceania leader for transaction advisory services says this is the catalyst for pursuing acquisitions, as businesses realise that the market recovery cannot support growth.

He says that there will be a period of low-growth for quite some time and it would be the same around the world. He adds that some parts of the world would give greater returns particularly in the Asian region, but as per his clients the regions know they would be in low growth and would use transactions and investments to grow.