Ion thrives on risk-taking and 12-hour working days

Ion Equity took what looked like the second jump into the unknown of its short career this week. The corporate finance adviser became the first such Irish company to open a London office.

The company is making the move at a time when many others in its business are looking at a market where opportunities are nowhere near the highs of the late 1990s and, worse still, look set to shrink still further before recovering. It's a sector in which biding your time looks like the best strategy at the moment.

Ion made its first jump into uncharted waters when it was founded three years ago as a technology-focused corporate finance and venture capital business. Chief executive Mr Neil O'Leary and his colleague, Mr Joe Devine, established the firm in 2000, just as the air was rapidly escaping what subsequently became known as the technology bubble.

"We set up in 2000," Mr O'Leary recalls, "and at the end of the following quarter, we had a strong market slump. The market slowed really rapidly over six months and a lot of the confidence went out of the technology market."

But the rapid turnaround in what was Ion's target market does not appear to have phased him. He points out that the business was confident it could carve out a niche for itself if it focused on building a good relationship with its clients geared at getting maximum value for them.

"We had a strong team and still felt there was room in the Irish market for a corporate advisory business. Not only that, we got a lot of encouragement from various clients that had done business with us in the past," he says.

He and his colleagues also put their money where there mouths were, and used their own capital as seed funding for the business. The risk looked to have been well rewarded by this year. As Mr O'Leary points out, it had 100 per cent of the technology corporate finance market in the first six months of 2003.

It handled two deals worth a total of €20 million. It was corporate adviser to Network365 which raised €10 million from investors that include Advent Venture Partners, Amadeus Capital Partners and Trinity Venture Capital. It played the same role for Corvil Networks, which raised €10.2 million from Cisco Systems, Apax Partners and ACT Venture Capital.

On the other side of its business, it has also invested in Corvil, as well as other Irish technology players, Prime and Similarity Systems. Last year, it was one of the advisers involved in the rescue of student travel business, USIT, and took a stake in the business itself.

Mr O'Leary says that its investments stand at €2-€3 million, but adds that the company will grow this to €5-€10 million over the next few years. "We are very pleased with the way our investments are working out," he says. While Ion intends growing its investment business, the corporate advisory side remains its largest element.

Ion is profitable, although he will not say by how much. Its turnover has risen from year to year, largely because its transactions have have been getting bigger. However, he will not put a figure on this either. Ion employs 10 people and expects to hire "a couple of people" this year.

Mr O'Leary originally hails from Midleton, Co Cork. His father, Mr Con O'Leary, managed the local Imokilly Co-op, and was an active and well-known figure in the movement. He was one of the first people to encourage what were the State's nascent food industries to process ingredients like casein from surplus milk supplies. This route was subsequently travelled very successfully by the Kerry Group.

Mr Neil O'Leary began his career as a solicitor. He spent five years in private practice with McCann Fitzgerald, one of the State's biggest law firms. In 1988, he moved to London and went to work for the London Stock Exchange. There he became a senior executive with responsibility for listings and market intelligence, and was responsible for a number of initiatives in emerging technologies.

From the exchange he moved to investment banking. He became a director of UBS Ltd, which subsequently became UBS Warburg. During his time in this post, he was involved with what at the time was one of the biggest exploration listings on the London market, Billiton, a South African company, which raised $1.6 billion (€1.4 billion) when it floated in the 1990s. At the other end of the scale, he had a hand in the £8 million sterling (€11.28 million) placing for Verity, the speaker company.

Like a lot of those who left Ireland in the 1980s, he was lured back in 1998 and was hired to build up a corporate finance arm for Dolmen Securities. This became Dolmen Corporate Finance, and he was its managing director until he left in 2000 to set up Ion.

Since then he and his colleagues have been putting what sound like a lot of 12-hour days getting the business to the point at which it is now. But given the company's own assessment of its sector, there could be more long days to come.

The most recent edition of its quarterly survey of private equity funding in the technology sector found it fell by 25 per cent in the second quarter of the year. It predicted that this trend would continue in the second half of 2003.

Mr O'Leary acknowledges that the business is slow in all sectors. He points out that most of the likely take-private deals on the Irish Stock Exchange have been done, leaving little room for growth at the large transaction side of the business. But he has identified areas which he believes will provide new opportunities. "On the non-technology side, we believe that there is going to be a fundamental shift in services," he says.

"A lot of industries are outsourcing non-core activities to service providers who do anything from cleaning services to plant operation and maintenance. There will be a consolidation of those service providers, as they are going to need scale to be able to compete."

He says that as this process, which is already happening in Britain and the US, creates new businesses and sees existing ones snapped up, corporate advisers are going to be needed again. He also says there may be opportunities in the Irish dairy sector as the expected consolidation in that sector gets under way. Given his family background, if Ion gets involved, at least it would not be a complete leap into the unknown.