AI Advances in Australia Are Unlocking Growth, Stabilizing Earnings and Simplifying Deals

In a climate of macro uncertainty, Australian dealmakers are turning to AI to future-proof their earnings and gain a competitive edge.

Superannuation funds and the global search for yield

One of the most transformative trends Cope has observed is the rise of outbound investment from Australia, powered by the rapid growth of the superannuation sector.

Two decades ago, Australian M&A was dominated by inbound flows, largely from the U.S. and Europe. The landscape today looks markedly different. The turning point, Cope says, came in the early 2000s, as increasing superannuation contributions and consistent returns created a significant pool of capital in search of deployment opportunities.

Today, the superannuation sector exceeds AUD 4 trillion, already outpacing the total value of the Australian equity market (around AUD 2.6 trillion). With forecasts projecting Australia will soon overtake other countries to become the second-largest private pension sector globally, outbound investment has become a core feature of the M&A market.

According to Cope, this flow of capital is not simply an optional strategy, it’s a structural imperative. With limited local opportunities, superannuation funds are deploying more capital offshore, especially into low-risk sectors like infrastructure. As these funds scale, he expects them to expand into “core plus” sectors such as healthcare and high-quality business services. Super funds are also increasingly establishing their own overseas offices, particularly in New York and London, to originate and manage international deal flow more effectively. He sees no reversal of this trend on the horizon. If anything, he says it will only intensify.

U.S. investors continue to lead in Australian M&A

While outbound investment is growing, inbound capital remains a critical part of the Australian M&A market. Historically, around 50 percent of inbound investment has come from the U.S., 25 percent from Europe, and the remainder from Asia Pacific. Cope believes that U.S. dominance is likely to grow further, particularly as the U.S. economy outpaces Europe.

He also sees technological leadership, especially in areas like artificial intelligence (AI), as a key factor reinforcing this trend. The strength and innovation of U.S. corporates, combined with their appetite for international expansion, will likely keep America as the leading source of cross-border investment into Australia for the foreseeable future.

Mid-market strength in a volatile environment

Australia’s mid-market, defined locally as transactions up to AUD 500 million, is not just where Cope spends most of his time, but also where he sees the greatest resilience in times of uncertainty.

While in the U.S. the mid-market stretches up to USD two billion and includes larger-cap global private equity firms, Australia’s mid-market is more locally dominated. Most of the activity is driven by domestic private equity (PE) players, with founder-owned businesses comprising a large portion of sell-side mandates.

This has important implications for deal dynamics. Founder-led firms are typically less sensitive to short-term market conditions than institutional investors. Once they decide to transact, they’re more focused on long-term value than on perfect market timing, making the segment more robust when macroeconomic conditions are volatile.

Cope suggests that Australia’s mid-market has outperformed larger-cap M&A in recent years, particularly as geopolitical and economic uncertainty dampened dealmaking globally. But despite that resilience, the market has been quieter than expected. Fewer assets have entered sale processes, a trend Cope attributes to macro uncertainty, not just valuation gaps.

Valuation gaps narrow, but uncertainty lingers

In the post-COVID years, a common challenge across the market has been valuation uncertainty. Between the lingering impacts of the pandemic and recent inflationary pressures, many businesses experienced erratic profitability, complicating buyers’ and sellers’ ability to agree on price.

While inflation is now trending down and COVID-related volatility is receding, Cope notes that confidence hasn’t fully returned. Even as valuation gaps begin to close, the volume of assets coming to market hasn’t met expectations, largely due to broader uncertainty stemming from the U.S., particularly around tariffs and fiscal policy.

This global nervousness has led many would-be sellers to hit pause. If a business is directly or even loosely exposed to tariff conversations or global trade tensions, it’s often withheld from market. Cope notes that this hesitation is not unique to Australia, it’s mirrored in the U.S. and Europe as well.

Healthcare M&A in a shifting market

Having worked on multiple healthcare transactions, Cope has a front-row seat to the sector’s pressures and potential. Over the past three years, healthcare operators, especially private hospital groups, have faced significant challenges.

Unlike other service sectors that can pass rising costs onto customers, hospital operators are largely bound by annual negotiations with health funds, limiting their pricing flexibility. As a result, many have struggled to maintain margins in the face of increasing labor and input costs. This has translated to more volatile earnings, making valuation harder and leading to more failed or postponed deals.

Yet despite these short-term headwinds, Cope sees strong long-term fundamentals for Australian healthcare. An aging population continues to drive demand, while Australia’s high-skilled immigration program - unlike those of many other Western countries - brings in younger, wealthier newcomers who further boost demand for services.

He also sees future efficiency gains through AI as a catalyst for renewed growth and margin expansion across the sector, a trend that could restore confidence and support more stable earnings, making assets easier to value and transact.

Smarter dealmaking through artificial intelligence

Cope is pragmatic but optimistic about the role of AI in investment banking. While change won’t happen overnight, he sees true potential for the technology to streamline processes, particularly in areas like drafting documents, identifying acquisition targets and mapping buyer universes more intelligently.

At Miles Advisory, junior staff are already using internal AI tools to improve speed and efficiency, particularly for drafting and research tasks. While confidentiality remains paramount, secure internal platforms are enabling teams to work faster without compromising client trust.

AI also enables a broader search for strategic fit. Where once dealmakers relied solely on traditional databases, AI now enables firms to peruse CEO commentary, public sentiment and sector chatter to identify potential buyers and targets that traditional methods might miss.

Cope expects most of the innovation to come out of the U.S. but believes the impact will be felt globally. Like many firms, Miles is actively exploring how to apply emerging tools, often in partnership with their U.S. affiliate, Lincoln International, to enhance deal execution and origination.

While the market recovery hasn't happened as quickly as many had hoped, Cope remains cautiously optimistic. Valuations stabilizing, superannuation capital continues to grow and AI is creating new efficiencies for teams.

“Things are just slightly different to what we expected,” he reflects, “but we’re hoping this current volatility, which is clearly impacting transaction volumes, will subside and we’ll see activity pick up.”

As uncertainty slowly gives way to opportunity, Australia’s mid-market is poised to benefit from powerful tailwinds, from outbound superannuation flows to AI-driven efficiency gains. While dealmakers must still navigate global headwinds, the combination of resilient local dynamics and smarter tools offer a clear path forward for those ready to adapt.