Irish entrepreneurs who are considering selling their businesses this year will find very significant interest - especially from British companies, according to a report by KPMG.
Figures for 1998 show that British companies were the biggest buyers of foreign businesses - out-buying the US for the first time in eight years. "As the UK is the country with which Irish companies have traditionally conducted most of their mergers and acquisition activity, this represents more positive news for Irish entrepreneurs thinking of selling their businesses."
Mr Pat Gorman, of KPMG Corporate Finance's Dublin office, told The Irish Times that acquisition and merger activity in Irish companies was extremely strong last year, compared to previous years. He said it was surprising that Britain had outstripped the US in the rush to buy up companies.
However, he said it was an indication of the eagerness of businesses outside the euro-zone, wishing to establish or build on their presence in a euro-zone country.
Mr Gorman said that when other factors such as a strong business confidence, low interest rates, strong stock markets and a 20 per cent rate of capital gains tax are taken into account, the environment is ideal for sellers of businesses.
The KPMG survey shows that worldwide cross-border mergers and acquisitions reached a new peak last year, despite a temporary lull between August and October, arising from the emerging market crisis. The aggregate value of international deals rose to a record £370 billion (#470 billion), compared to £232 billion (#294 billion) in 1997. The value of deals done abroad by British companies was $127.72 billion (#108.2 billion).
Mr Gorman said growing economic and commercial integration in Europe is forcing companies, within and outside the region, to consider new alliances and acquisitions. He said European businesses are merging or forging links to exploit new potential for industry consolidation and rationalisation in Europe.
Companies outside the region - led by US buyers - are more determined than ever to gain a foothold in what promises to become the world's largest single market, he said. "We expect the trend to continue in 1999 and beyond, as the implications of monetary union become more apparent," he said.
Britain also attracted the lion's share of international businesses on the acquisitions front. British companies worth $86.11 billion (#72.89 billion) were bought last year, up from $55.4 billion in 1997. US buyers completed the majority of the deals.
Germany was the next most popular European destination for corporate buyers. It recorded $36.7 billion of deals last year, compared with $19.28 in 1997. The next most popular destinations were Belgium, France, and Holland.
Mr Gorman said the emerging markets are getting the "cold shoulder" from international companies at present, in favour of what are perceived to be safer investments in North America and western Europe. "However, we expect the picture to shift somewhat in the coming year," he said.
"Economic recovery in most Asian markets - no matter how muted - should revive confidence and lead to new wave of corporate bargain hunting by western buyers," he said.
It was not just British and US companies who were active on the mergers and acquisitions front. Figures compiled by The Irish Times also show that Irish companies were involved in £9 billion of mergers. The figures included the biggest ever merger involving two Irish companies - Irish Life and Irish Permanent, in a merger valued at £2.9 billion.
(# - Euro)
