Trump and Brexit effects take toll on €7bn Irish M&A activity

Mergers and acquisitions activity involving Irish companies has declined sharply in recent months due to Brexit and other global trade worries, according to new research.

There were 162 deals recorded in 2018 where the target was an Irish company bought by a foreign or local businesses, according to law firm William Fry’s annual M&A Review. Deal volume was up from 151 the previous year.

The total value of those deals fell sharply, however, down 57 per cent to €7 billion, according to the research from William Fry in conjunction with specialist deal data firm Mergermarket.

Most of the buyouts of Irish businesses were completed by foreign acquirers, who accounted for deals valued at €6.3 billion of the €7 billion, which suggests domestic M&A deals were worth about €700 million.

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Acquisitive Irish companies, it seems, preferred to spend their capital abroad. In addition to the figures above, a further €6.1 billion was spent by Irish acquirers on 102 transactions to buy businesses abroad in so-called outbound M&A.

While the second quarter last year was particularly buoyant with a record 51 deals (excluding outbound) recorded by Irish businesses, by the final quarter the volume had fallen away to just under half this number.

“It’s not just Brexit. You also have the Trump factor and trade wars. Those issues have all fed into the pullback,” said Shane O’Donnell, head of corporate and M&A at William Fry. The researchers predicted deal volumes would remain “muted” in the first quarter of 2019.

Mr O’Donnell said the bulk of Irish M&A activity takes place in “mid-market” deals, which accounted for more than 90 per cent of transactions recorded. Of these, more than 50 per cent were in the €15 million to €100 million value bracket.

In terms of deal volumes, the busiest sector was business services with 19 per cent, although average deal value was much smaller than other sectors. Telecoms, tech and media companies accounted for the next biggest slice, with 16 per cent, followed by pharma and biotech at 15 per cent.

Meanwhile, financial services accounted for just 12 per cent of deals, but 45 per cent of deal value.

Notable transactions during 2018 included Nomad’s €225 million buyout of Green Isle Foods and Groupe Circet’s €150 million deal for KN Group, which builds telecoms infrastructure. Japanese group Orix’s €1.9 billion deal for stake in aircraft lessor Avolon was the biggest deal of 2018.