Capital Markets & Investor Relations Australia

Welcome to the latest edition of Global IR Insights, where FTI Consulting's Australian Strategic Communications team shares intel from our global network in capital markets communication and what it might mean for Australia.

Australian AGM season review and observations

As another year draws to a close and we look back on the Australian AGM season, there are a few interesting comments, insights and observations we can draw from this season.?

Firstly, preparation is critical and knowing the concerns, issues, and hot topics ahead of your AGM can save you much post-AGM stress. AGMs for mid and large-cap companies have generally had high levels of scrutiny, activism and media coverage.

However, companies that slip below the ASX300 have been thrown curve balls, with a number receiving strikes as the expectations placed on their larger counterparts start to filter down the line. Appropriate hurdles, gender diversity, and comparable base salary are all key considerations. A few of the concerns that have led to strikes include:?

• Short-term bonuses and discretion in how this is assessed
• ESG concerns centred on the ‘S’ with safety, culture and customer treatments
• Cultural issues and CEO payout
• ESG with a focus on the ‘E’ with Climate Activism
• A lack of Board and management independence

Post-AGM affords an opportunity for Boards and management teams to review the feedback and assess what they may need to do differently in 2024. A key consideration can be a proactive investor perception audit. This key resource in the Investor Relations tool kit can deliver strong value and insights into how shareholders are thinking about your company, concerns they may have and actions the business can take over the coming year.?

Investors ‘Cautiously Optimistic’ About M&A Outlook for 2024

At this year’s M&A Forum, co-hosted by IR Magazine & Governance Intelligence, a positive light was cast on 2024, ?seeing broad improvements in M&A compared with 2023.?

In Australia, leading law firm?Corrs Chambers Westgarth's viewfinder pointed at the resource and energy sectors – the most active for M&A over the last 12 months, drawing in 41% of deals in 2023.?

Overall, Corrs predicts M&A activity will remain robust over the coming year but describes the outlook as “fragile”, with closing deals remaining a challenge for many players, noting the uncertainty surrounding the path of inflation and investor confidence.

Communicating upfront

Investors face red and green flags around M&A in communicating deal values.?

‘If you’re doing a deal and you need to start convincing shareholders, then when you announce it, you’ve probably already lost, Michael Higgins, vice president of corporate strategy and IR at Advanced Drainage Systems, said at this year's forum. ‘You should be communicating upfront in terms of what your strategy is around acquisitions and you should be reiterating that message constantly.’

‘Relatedness is: how does that business fit from a cost and customer-sharing standpoint?’ he explained. ‘And attractiveness is: what’s the size of the market it’s going into? What’s its growth rate? What’s the financial profile, the competitive intensity? And when you score those opportunities, hopefully they score to the upper right’, he added.