M&A in Ireland & 2023 Outlook

In recent years, Ireland has been a hotspot for mergers and acquisitions (M&A) activity. With a strong economy and business-friendly environment, Ireland has attracted both domestic and international investors looking to expand their businesses. The past year has been no exception, with a number of high-profile deals making headlines. Let's take a closer look at the current M&A activity in Ireland and what we can expect in 2023. 

Overview of Recent M&A Activity in Ireland:

Despite the challenges posed by the legacy of the COVID-19 pandemic and the fallout from the Ukraine war, M&A activity in Ireland has persisted. The Irish M&A market saw 240 significant transactions reported in 2021, up 33% from 2020 and the highest deal volume since 2006. The total aggregate value of nearly €25 billion represented a substantial improvement on the prior year, when only 180 transactions totalling €8.6 billion were completed.

The number of successful mergers and acquisition deals has been rising over the past few years, and that trend continued in 2022. In the Irish M&A market, 300 eligible transactions were reported in 2022, however deal values fell when compared to 2021, with total deal value of €14.8 billion.

In 2022, only seven deal values exceeded €500 million, while the majority (86%) of transactions ranged from €5 million to €250 million. Set against pre-pandemic levels of activity, 2022 private equity (PE) activity was strong, with a total of 62 transactions. TMT (Technology, Media and Telecommunications), Financial Services and Healthcare are the sectors which saw the greatest level activity in 2022. The technology industry has been a major driver of M&A activity in Ireland, being home to a large number of multinational tech companies, representing 22% of all deals by volume in 2022. The financial services sector also featured prominently in deals across 2022, accounting for 51% of Irish M&A by value.

The focus of recent acquisitions and the driver of M&A activity has been the creation of strategic alliances, consolidation and deals that support digital transformation. 

2022 Notable Deals:

The purchase of Dublin-based Goshawk Aviation (aircraft leasing and financing) by SMBC Aviation Capital, valued at approximately €6.4 billion, was the highest value deal in Ireland of 2022.

Dublin-based Hibernia REIT (real estate group) was also acquired in 2022 for €1.1 billion by Canadian firm Brookfield Asset Management. Hibernia REIT had been listed on the stock market since 2013 and shares had traded at a discount to net tangible assets for six years, making it an attractive takeover target.

Deals RBK Advised On:

The RBK Corporate Finance team led by Partner Chris Ball and Directors Aidan Heavey (Dublin office) and Jennifer Brennan (Athlone office) had a busy year assisting a number of clients with both buy and sell-side advisory in 2022.

The sale of Gateway Insurance to Aston Lark was successfully negotiated by RBK under the direction of a team led by Jennifer Brennan. Gateway Insurance, an Athlone-based general insurance company, was established in 1981. RBK assisted Gateway in sourcing a strategically aligned purchaser, who was focused on the future development of the business, and Jennifer worked closely with all parties to see the transaction through to completion.

RBK also offered full transaction support encompassing tax, financial and corporate finance advisory services to Craddock House on its sale of the 89 bed nursing home in Naas to Aedifica, a publicly traded business with 622 properties throughout Europe that specialises in investments in European healthcare real estate. RBK is active in delivering solutions for SME owners in Ireland to successfully exit either through MBO’s, trade sales or Private Equity exit. RBK identified and supported Corrugated Packaging Holdings in its successful acquisition of ACE Corrugated in early 2023.

On the international front RBK have assisted Irish based clients expand abroad with McBreen Environmental acquiring an equity stake in Colus in the UK and more recently, the Corporate Finance team assisted Westmeath-based DECOTEK Group on the acquisition of Czech-based AAS Automotive s.r.o. AAS Automotive is a supplier of roof systems and trim to the automotive industry. The acquisition sees DECOTEK expand its product portfolio as well as Increase its presence in the market, particularly in Central Europe.

Outlook for 2023:

While global deal activity remains clouded by macroeconomic volatility, rising interest rates, geopolitical tensions including the war in Ukraine and supply chain disruptions, from a recent 2023 Global CEO survey, 62% of Irish CEOs (Global: 60%) say that they are, nevertheless, not planning to delay deals in 2023.

Despite the fact that there was a lot of deal activity in Q1 2023, there are a number of variables that may ultimately impact the number of mergers and acquisitions that occur this year. Although the COVID-19 pandemic's impacts are continuing to decline, there are still obvious supply chain interruptions that have increased market volatility.

However, because of the general shift towards remote work, which looks like is here to stay, there is a greater need for both cloud-based collaboration and cyber security solutions. Utilising cloud technology offers a more adaptable, subscription-based working paradigm, to replace outmoded, capital-intensive technology. 2022 activity in this sector included Partners acquisition of Version 1 – at an 18x EBITDA; Ekco’s purchase of Kontex and Viatel’s acquisition of SupportIT. This trend has continued into 2023 with Zoom’s acquisition of Workvivo and Nostra acquisition of Passax Business Systems. M&A leaders expect the technology sector to be most active in 2023 as investors look to strengthen their existing offering and capitalise on lower valuations. Healthcare, pharmaceuticals and energy/infrastructure sectors are also expected to be particularly active in 2023.

While deal volumes are expected to remain broadly stable in 2023, the expectation is that deal multiples will decline following a period of historic highs in company valuations and an environment of increasing interest rates. This is an important consideration for any party exploring M&A activity, but not one that should deter activity.

Despite the notable ongoing market challenges, we believe there is ample reason for optimism regarding the prospects for M&A activity in Ireland in 2023. With one of the lowest corporate tax rates in the EU and close links to the UK, the country remains a top choice for global corporations looking to establish operations in Europe. Due to its strong base of well-established innovative industry sectors and its current financial situation, Ireland will remain a popular destination for mergers and acquisitions for the foreseeable future.

RBK Team:

At RBK, we have added considerable experience and expertise to our Dublin based team, with the addition of Aidan Heavey as Corporate Finance Director, two additional Senior Managers and an assistant Manager, which greatly enhances the firm’s Corporate Finance offering nationally. This is reflective of the continued demand we have seen from both our existing clients and the broader SME sector and our outlook that M&A activity will remain strong for the rest of 2023 and into 2024.

Jennifer Brennan

Corporate Finance Director

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