Australia's biggest private companies expect 2006 to be another year of strong profits with many looking to make acquisitions to fuel growth, a new survey has found.
Ernst & Young's annual Transaction Trends survey of 200 of the country's leading private companies found strong optimism about the prospects for the Australian economy in 2006.
Almost half of the companies surveyed expect their revenues to rise by 10 per cent this year while 17 per cent expect growth of more than 20 per cent.
Increasing numbers of executives are planning to achieve this growth through acquisitions rather than organic growth.
About a third of respondents planned to make acquisitions in 2006, up from 24 per cent in 2005.
And 23 per cent expect to make overseas acquisitions, up from 17 per cent in 2005, with New Zealand the most favoured location followed by North America and South East Asia.
Ernst & Young partner Graeme Browning said while the prices of domestic acquisitions are rising but they remain the most common targets for private companies.
"The domestic market continues to be the most popular for acquisitions and, while valuations have risen here over the past few years, they are generally still less than in other developed markets such as Europe and the US," he said.
But Mr Browning noted that just as acquisitions were on the rise so were divestments, with 36 per cent of respondents planning to get rid of non-core assets in 2006, up from 30 per cent in 2005.
About half of the companies surveyed plan to raise funds to help finance expansion in 2006 and together they expect to raise a total of about A$800 million ($893.75 million).
Of the companies with revenues greater than A$100 million that planned to raise funds, 48 per cent hoped to raise more than A$20 million.
Mr Browning said businesses of all sizes are looking to raise funds and if the survey results held true "the desire for funding across the private sector in 2006 is likely to be very large".
With interest rates at low levels debt was still the most common source of funds for private companies.
Bt the survey found private equity and venture capital were also a rapidly growing source of funds.
- AAP
Private companies in Australia buoyant about 2006
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