Insights

Deloitte positive about deal prospects for 2017 

Despite the disruption caused by the Brexit vote, the number of corporate deals has continued to increase across Europe, including Ireland.  

“The recovery in the banking sector and the emergence of an alternative lender and asset backed lender market is presenting Irish owned companies with funding options that weren’t available two to three years ago,” said John Doddy, partner, corporate finance, Deloitte. 

“These include senior term debt, working capital and leverage finance, for example unitranche debt and mezzanine debt,” he added. 

He also confirmed that the Deloitte M&A team, led by Anya Cummins is seeing a lot more activity backed by Private Equity and is in active engagement with domestic and international private equity houses. 

Over the past 15 quarters the Deloitte Alternative Lender Deal Tracker which tracks 47 of the leading alternative lenders in Europe in terms of corporate deals has become an invaluable source for gauging alternative lender backed deals. 

Deloitte has tracked 784 corporate deals across Europe in the last 15 quarters, this includes 130 deals in Q1 and Q2 2016, which compares to 117 deals in same period in 2015. 

As Doddy pointed out, “This shows how robust the deals were in 2016.  Despite the disruption of the Brexit vote the number of deals continued to increase across Europe.”

Of the 784 corporate deals tracked by Deloitte, 11 took place in Ireland. But, said Doddy, “The level of deals in Ireland backed by alternative lenders is considerably higher when you take into account property based deals. In fact, one of the largest unitrache deals in Europe was the €350m refinance of the Mater Hospital which took place in August. “ 

While stating that alternative lenders are sector agnostic, he added, “we are seeing a lot of activity in the hospitality sectors particularly with hotels and pubs, and there is a marked increased level of activity in retail and in property development and property re-financing.” 

This level of increased activity is made possible by greater access to finance. “In our experience businesses with a strong management team and well thought out business plans will be successful in accessing appropriate capital across all sectors. The key is to work through various funding options in order to arrive at a clear strategy before engaging with funders.” 

“Our expertise and value-add lies in three key areas.  We are independent of capital and therefore can give truly independent advice to achieve an optimum funding strategy for the businesses we represent.  Secondly, this is what we do every day, therefore we have a deep insight into the market, and we know what funders are looking for and what structures are available. Finally, the fundraising process can be demanding on the management team’s time, we run the process on behalf of clients and thereby free up the management team to get on with the challenges of managing their business.” 

Doddy stressed the importance of conducting a full review of the funding options before engaging with funders.  “The mistake many businesses make is to engage with funders before preparing a full business plan and funding strategy. In our experience companies that present a clear strategy and plan to funders significantly enhance their prospect of achieving better term and conditions.”

Earlier this week Deloitte in conjunction with Enterprise Ireland hosted its annual CEO Forum, attended by over 350 Irish CEOs and business leaders. A survey conducted amongst attendees found that 96 percent are planning for expansion over the next year and 84 percent are confident of revenue growth. “Those factors indicate an active year for corporate transactions in 2017,” concluded Doddy.   

This article originally appeared in the Sunday Business Post. 

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