Figures from law firm William Fry show that the total value of mergers and acquisitions (M&A) recorded in the Irish market last year fell by 20% compared with 2022.
In its annual report on Irish M&A activity in 2023, the firm says that 334 qualifying deals last year represented an increase of 10% compared with 2022.
The total deal value, however, came to €11.8 billion – down €3 billion (20%) on the previous year.
Deal-making ‘healthy’
Mark Talbot (corporate/M&A partner) described the Irish market’s performance as “resilient”, coming against a global backdrop of negative economic and political news.
He said that the number of deals compared “very favourably” to the wider European and global markets, where the equivalent figures had fallen sharply.
“It should be noted, however, that deal-making in Ireland remains very healthy by historical (pre-COVID) standards,” Talbot stated.
“A large proportion of Irish M&A activity is driven by non-Irish acquirors, whose appetite to do higher value deals was somewhat diminished in 2023 by factors such as rising interest rates, high inflation and political instability,” he added.
Fewer big deals
A breakdown of the figures shows that mid-market transactions again dominated activity in Ireland in 2022, with 254 transactions out of 334 having values of between €250 million and €500 million.
There were only five transaction worth more than €500 million last year – down from seven in 2022.
The financial-services sector accounted for 35% of deals by value in 2023. This included the largest deal of the year – the €3.3 billion acquisition of Pembroke Aircraft Leasing by AviLease.
The technology, media, and telecoms (TMT) sector recorded the most deals, but many of these were smaller, more specialist transactions, according to William Fry.
Overseas bidders dominate
The report says that Ireland remains “very attractive” to overseas bidders, with around two-thirds of last year’s deals involving a bid from outside the country. Collectively, those deals accounted for 96% of the total value of M&A transactions in 2023.
British-based buyers accounted for 80 transactions, while US acquirers were responsible for 50 deals.
The number of private-equity transactions dropped by 11% to 58, in line with reduced activity in European and North American markets as higher interest rates affected the industry’s ability to raise money.
International factors
Talbot describes the outlook for 2024 as “mixed”, with a more stable interest-rate environment and a resilient Irish economic performance expected to encourage positivity.
“Conversely, it will be difficult for the Irish market to avoid the considerable risk that negative international factors could lead to a conservative approach being taken by strategic and private-equity buyers in 2024,” he added.
“Finally, new rules seeking to control the foreign (non-EEA) acquisition of strategic Irish businesses are due to come into force early in 2024. Observers will be keenly watching the manner in which the new procedures are implemented," Talbot concluded.