Irish dealmaking holds up better than large global M&A

The number of Irish mergers and acquisition (M&A) deals declined by 10 per cent in the first half of the year but Ireland proved to be “remarkably resilient” compared with a slump in large deals globally, as the domestic economy remained strong in the face of rising interest rates, according to Davy.

Some 209 deals involving Irish companies were struck during the period, down from 232 for the corresponding six months last year, it said.

By contrast, the volume of the global level of dealmaking, involving transactions worth more than $100 million (€91 million), slid by 37 per cent year-on-year to 280 deals in the first half, according to figures issued last week by Willis Towers Watson, the risk-management and insurance-broking giant.

Jonathan Simmons, director of corporate finance at Davy, said the pace of dealmaking so far this year was better than most in the sector would have expected this time last year, given uncertainty at the time caused by the Ukraine war, soaring inflation and speculation on the pace at which central banks would hike interest rates.

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“The domestic Irish economy is continuing to perform well in contrast to the UK and some other jurisdictions,” he said. “There is a strong indigenous technology sector here in Ireland, which continues to drive overall M&A deals. Valuations in certain parts of the tech space, including cybersecurity, artificial intelligence and data analytics continue to be fairly strong.”

The Nasdaq Composite index is up about 39 per cent so far this year, following a 33 per slump last year.*

“Thirdly, there continues to be a trend of consolidation in certain sectors in Ireland, such as insurance broking,” said Mr Simmons.

He said that while rising interest rates and ongoing inflation are usually deterrents for dealmaking, “these are things that buyers and sellers of assets can get their heads around” when making decisions. “It’s different to the noticeable pauses in activity following the black swan events of Brexit in July 2016 and the initial outbreak of Covid-19 in early 2020,” he said.

Large deals during the first half include technology entrepreneur Terry Clune’s CluneTech group agreeing to sell payroll software developer Immedis to US multinational UKG in a deal said to be worth €575 million.

Kerry Group also agreed during the period to sell its sweet ingredients business to US equity firm Advent International for €500 million.

Active Irish acquirers during the first six months of the year included Zeus Packaging, which completed purchases in Poland, Italy and Britain, and Co Mayo-based workwear company Portwest, which bought Canada’s IFR Workwear.

*This story was amended on July 12th, 2023 to correct data on Nasdaq’s performance.