M&A Trends for Regional Markets in 2026

Last time we answered this question with a resounding “yes” – the law is the same, but the transaction structures and decision-making process can be quite different.

Regional M&A transaction types broadly follow national M&A trends.  Over the past 25 years we have worked on deals that have tracked the backend of the first telecommunications and then dot-com bubble, into the mining boom and then the startup / private equity and VC deal cycles that followed the GFC.  In the past few years M&A has focused on specific sectors – Agri-business, mining and resources, technology (and “IP rich” organisations) as well as unique ‘skills based’ businesses all feature heavily.

But there are clear points of distinction and unique features that also impact regional transactions.  Unsurprisingly, they tend to be classic mid-market deals.  We have worked with a lot of family-controlled high growth businesses, focusing on customer and product or service delivery.  There are also several national businesses that operate in the regional locations we work in, leveraging skills, resources or education.

Suitors have realised that gaining a local ‘on the ground’ perspective is critical.  Transaction lead times tend to be slower and the lack of regionally focused economic data increases risk, delay deal completion and can have a direct bearing on conditions precedent and regulatory approval hurdles.  We do not see these characteristics changing and their impact on transactions should not be underestimated.

As we said in 2024, key economic data for regional economies is nearly always grouped and reported on a “regional market” or geographic basis – by banks, government and industry associations.  There is clearly a need to standardise numbers for consistency.

As a result, boards and key decision makers tend to focus on specific micro-economic factors and sector peculiarities when making a “go / no go” transaction decision.  Often that decision is based on experience or ‘gut feel’, customer feedback or national reporting that must be extrapolated for their circumstances.  When the data is poor (or non-existent), there is an increased likelihood a deal will be pulled.

Coming into 2024, our experience was consistent with the widely reported ‘bear market’.  In our 2024 article we noted that many global investment banks and some corporate finance teams were “talking up” prospects for the M&A and IPO markets.  But we said that confidence for regional M&A remained weak, despite the recent pause in interest rates and the likelihood of rate reductions.

Our key observations were:

• poor economic data was causing delayed deal times
• regional boards would continue to focus on local factors when deciding whether or not to transact
• interest rate increases and the (then new) “cost of living crisis” would impact and delay deals for regional SMEs
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We also said:

”We think the regional position generally, and regional SME private treaty M&A more specifically, lags significantly behind the position in metro markets.  It follows that we do not think there will be a dramatic change or resurgence in regional M&A for some time.”

And we said this:

“Our view is that, rather than 2024 seeing a resurgence in deal flow, it is more likely that regional M&A will continue to lag behind the national trend. … we think regional M&A could remain quiet for the remainder of 2024 and possibly into 2025.”

For the markets in which we operate, 2024 was the leanest M&A and capital raising year that we have experienced in more than 25 years.  And our firm’s experience accords with other advisory, accounting and corporate finance teams that work in our space.  Towards the back end of 2025 however, almost as if someone “flipped a switch”, deal flow returned to normal transmission.

At the beginning of the 2025 / 2026 financial year, regional M&A activity began to return to a more typical and steadier pace.  Why?

We think interest rate cuts finally had an impact on investment decisions for regional businesses from about May / June of 2025.  Interestingly, this would suggest an “investment lag” of more than 12 and closer to 18 months, following the initial RBA interest rate cut.  As there has now been one rate rise (with many economists predicting at least one further increase this calendar year), this may mean that deal flow could continue for the balance of 2026 and perhaps into the start of 2027, before slowing.

Our clients have also started asking us what regional markets segments are likely to remain more resilient in 2026:

• NDIS – It has been widely reported that the National Disability Insurance Scheme (NDIS) sector is in ‘an era of consolidation’. Small scale providers continue to face rising compliance costs that put significant pressure on the viability of their business operations.  We think that the trend of larger operators, who have the benefits of scale, looking to acquire small businesses under financial distress, will continue and we have seen a rise in NDIS deals as a result.
• Mining & Resources – M&A involving businesses operating in the mining and resources sector continued to attract (buy and sell side) interest during 2024 and into the beginning of 2025. However, during this slower period, transactions took longer to close and were (generally) harder to complete.  Several deals we worked on did not get past preliminary due diligence stages.  We think deal flow will trend up in this sector, particularly in NSW, WA and Queensland, during 2026.  Market consolidation, cost increases and regulatory pressure (particularly relating to labour) will have an impact but we have seen an up-tick in activity and expect it to continue in the short term.
• Manufacturing –Prior to mid-2025, transaction volume for manufacturing businesses was impacted by cost pressures (including interest rate rises) but also geopolitical uncertainty and imposition of tariffs by the US. We are now seeing signs of a resurgence of buyer interest in regional products businesses, particularly where the business can combine unique manufacturing capability and IP with an experienced labour workforce that is willing to remain with the business.  However, we are also aware that scepticism from sophisticated corporate buyers that are reluctant, given the risks associated with a typical outlay for capital intensive equipment (such as fully equipped workshops) located in regional areas, has not abated.
• Tech & AI adjacent – Aligned with global market trends, there are opportunities for businesses in the technology, SaaS and data sectors. A remote location is not necessarily an impediment to these businesses.  In some cases, the often cited ‘regional market’ geographic risk is less prevalent.  Further, where these businesses are based near a regional university, they tend to have great access to ideas and can establish valuable intellectual property rights.  These types of factors are creating unique opportunities for technology businesses based outside of the capital cities.  We are working with regional businesses directly exposed to data centres, and the rapid expansion of AI related services, and we think the appetite for prospective buyers to “look to the regions” will continue to grow.

This article is not legal advice.  It is intended to provide commentary and general information only.  Access to this article does not entitle you to rely on it as legal advice.  You should obtain formal legal advice specific to your own situation.  Please contact us if you require advice on matters covered by this article.