Across the State, a new generation of home-grown millionaires is emerging. For many years, most of Ireland's wealth was inherited, while a few made money out of our small group of public companies; now hardly a week passes without news of another entrepreneur selling out, or getting a multi-million pound payday as a business floats on the market. The huge financial windfalls to be gained from the flotation or sale of a successful business are, say financial advisers, leading many business managers to re-examine their own position. As well as the rich or potentially rich owner-managers, they say that another wealthy group is emerging. These are middle managers in the mainly multinational, high-tech firms who received share options at attractive prices in the late 1980s or early 1990s and are now sitting on paper gains of hundreds of thousands of pounds.
However the really big pay-days have come from company sales and flotations. According to Chapman Flood Corporate Finance, 37 Irish firms sold out to overseas companies for a total of £295 million last year, while a handful of other firms were purchased by other Irish companies in deals which involved big pay-days for shareholders, such as the IAWS acquisition of Cuisine de France. A total of 20 Irish companies sold to foreign purchasers in the first half of this year, they say, with a further couple of deals between Irish firms.
This week saw the principal shareholders of Walsh Western, the Dublin-based distribution company, sell their company for slightly less than £40 million to Exel, a subsidiary of NFC plc. This transaction may not have excited, but for principal shareholder Mr Michael Enright (48) it means £9 million in cash and up to £18 million in profit-related payments in the future.
On the same day the Goodbody family, the main shareholders in the textile rental and hygiene services group, Connacht & Court, received more than £14 million when they agreed to sell the firm to British company, Johnson Service.
While this burst of sell-offs may be exceptional, there is no doubt that a noticeable pattern of selling out or cashing-in is taking place.
Mr Chris O'Connell, a director of IBI Corporate Finance, which handles many of these acquisitions and sell-offs, says this activity is just another symbol of the economy's current strength.
"There is no doubt that there is an acceleration in Irish companies being acquired by either larger Irish firms or overseas interests."
He says there are several explanations for the trend, chief among them the reduction in the last budget in capital gains tax (CGT) from 40 per cent to 20 per cent. "That brought a lot of people out of the woodwork," he says.
The reduction means in effect that people selling a company, or a shareholding, have had their tax bill halved, as a result of Mr McCreevy's budget.
"It has made the prospect of selling a business a lot more attractive to people," says Mr O'Connell.
Mr Gerry Moloney, director of investment policy at Forbairt, which has had a share in many of the companies who have decided to sell, has another explanation. "Unlike 10 or 20 years ago, companies no longer see new equity coming into their firm as a major problem," he says. Many shareholders sell their firms and subsequently stay on in management positions, he points out.
According to Mr O'Connell there is also a cultural explanation behind the sell-offs. "We are seeing the first real generation of Irish business people coming close to retirement and many of them realise that they cannot grow the business further." Instead they are deciding to cash in their shareholding and enjoy their retirement in style, he says.
As the millionaires' panel illustrates the proportion of business people doing this seems to be growing. But selling to another company is the only option.
Market flotation is the other main route to riches. Nine Irish companies have floated here or in the US over the past year and a host more are preparing to go for the market. Just this week three former CR Bard executives raised £12 million, valuing a company yet to record any sales at £25 million.
Typically, the beneficiaries from the flotation of high-tech companies are in their 40s and are cashing in shareholdings or options taken in early days.
Icon is an example of a company with a low-profile outside its own sector of clinical research which hit the jackpot with a £113 million Nasdaq-listing. The two main shareholders, Dr Ronan Lambe and Dr John Climax, are now worth more than £28 million each. When dealing with figures like this it is hard to believe they had to mortgage their homes eight years ago to provide the start-up capital for the company.
There are many more to come. In a recent report from Goodbody stockbrokers, 27 technology firms were tipped to seek either a Nasdaq or Dublin listing in the near future. The option of staying private is becoming less popular, with technology firms just waiting to achieve critical mass before embarking on the flotation route.
But it is not just the fashionable high-tech sector where the process is taking place. Galway firm Higgins Engineering was sold recently for more than £20 million in cash to the British company Rubicon and profit-related payments could bring the total to £75 million. One element of these sales is the willingness of the buyer to put up large amounts of cash as part of the purchasing deal. For example, when IAWS decided to purchase Cuisine de France, its two main shareholders, Mr Ronan McNamee and Dr Pat Loughrey, received £40 million in cash between them.
Even relatively smaller companies seem to be getting a piece of the action. A few months ago the alarm and security company, Magnum, was bought for several million pounds by the British group, Williams.
The purchases by British companies, while enriching individual shareholders, also have other important implications.
"We are seeing a large section of Irish business being taken over by British companies and people might not realise that is happening, if they only analyse things individually," says Mr O'Connell.
The move into the Irish market by British multiples such as Tesco and Boots has resulted in other smaller British companies taking a fresh look around for acquisitions here, he adds.
According to Mr Moloney this is all part of new entrepreneurial spirit which has emerged in the Republic over the last five to 10 years.
"All these companies have to work hard and go through a sometimes painful period of development nothing happens overnight," he says.
Financial advisers say that the new wealthy have created a new demand for investment advice. Many took advantage of property investment schemes typically taking shares in hotels or offices in tax-designated areas although these have now become less attractive. Some are also considering becoming non-resident for tax purposes, although again the Revenue have tightened up the rules in this area.
And while some of the sell-outs are prompted by a desire to build a fund for an imminent retirement, many of the high-tech millionaires who have sold their companies are "not shutting up shop and going off to see the world", as one adviser put it
Many are starting new companies and relishing the challenge of starting in a more organised way second time around. And, no doubt, hoping to become millionaires for a second time around sometime early in the new millennium.
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