Schemes of Arrangement could become the preferred structure for public mergers and acquisitions, Simpson Grierson corporate partner Andrew Matthews says.
He says although banished for a number of years - and branded a "sneaky loophole" for takeovers, increased regulation for Schemes with the associated Takeovers Panel support and oversight have seen schemes return.
"We think they will become the preferred structure for public M&A," he says.
"The execution risk with a Scheme is often perceived to be lower, requiring the support of only 75% of voting shareholders (in each interest group) plus 50% of all votes available – less than 90% of all shares under a takeover."
Mr Matthews says things really kicked off with the Nuplex/Allnex Scheme in 2016 "but any conversation we have on a public markets deal involves a Scheme - and it's usually the starting point where there is a recommended deal".
Looking at market conditions overall, he says they remain conduicive for deal activity "and New Zealand and Australian-based private equity is cashed up and ready to go".
"For good assets, the competition remains strong and we see a shift back to auction processes. However, asset quality is key – buyers are sensitive to protecting returns, looking for growth, and no one is prepared to over pay. Where the quality isn’t present or the buyer/seller expectations are too divergent, we have seen some assets have been in-play for a long time."