International bankers getting into M&A downunder

(Australia) – Although the large domestic corporate banks still own big chunks of Australia’s Merger & Acquisition marketplace, the internationals are making rapid gains in positioning themselves as primary relationship bankers for this business.

Based on the
latest 6 monthly East & Partners analysis of account penetration and
market share in the Top 500 Australian corporates and institutions, the
research also shows that primary M&A relationships attract the bulk of a
customer’s business. The two analyses following show this “share of
wallet” to be climbing and already close to 90 percent of total
business written by the service provider holding primary relationship
positioning with the corporate in M&A services. Nowhere is the mantra
“relationship, relationship” more relevant to a bank and becoming
more so, than in M&A business.

Much of this
is being driven by expectations on the part of corporates for real industry
sector understanding to be displayed by their M&A bankers. With an
increasing proportion of Australia’s total M&A activity being
internationalised – both inward and outbound – bankers clearly have to
table a deep understanding of an industry’s dynamics and display close
connections with key players in order to receive mandates.

Domestic
bankers, in particular the “Big 4” are defending their positions
with some vigour, building out sector based advisory teams and recruiting
expatriates back to the country with lifestyle and market maturity
arguments. Holding what is in many cases multi-product relationships with
their customers already, the key to their defence of this space lies in the
banks’ abilities to effectively cross sell capability in M&A from
transaction and financial markets relationships with the customer; an
argument of course that the international investment bankers dismiss as
irrelevant, concentrating instead on niche relationship development with the
market.