The volume of M&A deals in Ireland reached a five-year high, despite a backdrop of increased geo-political instability, macro-economic issues and Brexit. The findings are reported by William Fry’s eight Annual M&A Report.
Healthy but challenging
The review found that Ireland boasts a healthy M&A environment despite ongoing global challenges, with key findings including a rise in deal volume rose with 162 deals (up from 151), whilst deal value fell by 57 per cent to €7bn in 2018. There were 65 ‘mid-market’ deals (value €5m-€250m), while private equity transactions remained strong with 34 deals announced. The top sectors were business services (19 per cent), TMT (16 per cent), pharma, medical & biotech (15 per cent), and, financial services (12 per cent). The review suggests international buyers continue to see considerable strategic value in Ireland’s businesses, with 2018 seeing the highest annual volume of inbound deals, totaling 108 deals with a value of €6.3bn. In addition, nine of the top 10 largest deals of 2018 were inbound transactions, with acquirers emanating from as far afield as Japan and China, as well as from markets that have long held strong ties with Ireland, such as the UK and the US. Outbound activity was also very buoyant with 102 deals with a value of €6.1bn taking place during the year compared to 101 deals in 2017. Shane O’Donnell, partner and head of corporate/M&A at William Fry, explained ‘activity was strongest in the first three quarters of the year, with both the value and volume of M&A deals falling as 2018 drew to a close. This is consistent with global M&A patterns and reflects growing unease due to political and economic uncertainty.’
Ireland is seen as an attractive location for many businesses seeking to relocate operations post-Brexit, according to Mr O’Donnell who noted, ‘the rise of large financial services transactions over the last two years are in part a reflection of Ireland's strength in the aircraft leasing subsector, but it also demonstrates the attractiveness of Dublin as a base for businesses in the sector looking for alternatives to London. Dublin has positioned itself as a hub for previously UK-based firms that need to service EU clients and has attracted names such as Barclays and Merrill Lynch, which have both received authorisation to expand in Ireland. However, despite these highly positive signs, Brexit continues to pose challenges for financial services firms in Ireland.’ Looking ahead to 2019, Mr O’Donnell said ‘as we move into 2019, the outlook for M&A activity in Ireland is more mixed than has been the case over recent years.’ However, he concluded ‘absent any major shock, overseas and domestic companies will continue to make acquisitions of businesses in this bracket as they seek to respond to challenges posed by an ever evolving economic and political landscape.’