War and protectionism are making it harder to do corporate deals, report suggests

More than two-thirds of Irish businesses surveyed for a new report on the driving forces behind corporate dealmaking say that protectionism is making it more difficult to do mergers and acquisitions. The war in Ukraine has also made companies more wary of entering transactions and up to a fifth of businesses globally say they have cancelled all M&A activity since the beginning of the year.

Law firm Eversheds Sutherland conducted research with business leaders in 16 countries, including Ireland, for a new report on the drivers of strategic M&A.

About 68 per cent of the Irish businesses surveyed said growing protectionism in international trade is making the landscape for mergers and acquisitions more complex, while business leaders globally say it is making it more difficult to do deals to break into growth markets. Three-quarters of those surveyed said the war in Ukraine is harming M&A activity, with the impact of sanctions on international trade.

The direct impact of the war on attitudes towards corporate dealmaking was also apparent in the disparity between attitudes measured at the beginning of the year, and again in April after the war had started. At the beginning of the year, 70 per cent of businesses surveyed globally said they expected their appetite for M&A to increase significantly over the following 12 months. But by April, 90 per cent said the war had resulted in deals being cancelled or delayed, and more than 20 per cent said all M&A activity was postponed.

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In Ireland, the acquisition and retention of talent is seen as a key driver of M&A, with more than 70 per cent citing its importance in dealmaking planned for this year. More than three-quarters of Irish businesses surveyed also want to improve cyber security and are seeking “digital transformation”, with M&A activity cited by most as a key driver in bridging technology gaps.

“Our research revealed that the majority of Irish business leaders see talent, technology and trade as the main factors impacting the M&A landscape,” said Enda Newton, a partner in the corporate practice of Eversheds in Dublin. The firm employs 300 at its Irish offices in Dublin and Belfast.