Future of the Deal
The beginning of a new M&A Season
After four consecutive years of crossing the $3 trillion annual mark, the M&A market continues to surpass expectations, it crossed the $1 trillion mark within the first three months of 2018, the fastest ever pace.
The wind of change is underway – from a rise in shareholder activism and the return of private equity to the threat of disruptive innovation and potential trade wars – these themes are expected to have a major impact on the M&A markets.
Irish M&A activity followed similar global trends, with 2017 proving to be an extremely strong year. Deal volumes here increased by almost 6% to 143, while overall values of €14.9bn were reported. A number of factors have driven both global and Irish activity levels:
- Private equity (PE) houses are sitting on an estimated $1 trillion worth of unallocated capital. This is despite global PE deal values in 2017 reaching their highest levels since 2007. From a volume perspective, 37 PE deals were completed in Ireland in 2017.
- Cash-rich trade acquirers are sitting on substantial fire-power, with reform of the US tax base giving a boost to the cash resources of US acquirers in particular;
- Debt markets are open and margins are competitive – alternative lenders are competing strongly with local banks in the Irish market;
- Disruptive technology acquisitions and investments are becoming more common with “traditional” companies seeking to capture the capabilities which will allow them serve customer needs and create business models for the future; and
- Corporate divestments remain a feature of the market. 2017 saw Aryzta, JBS Group, DCC and IPL Plastics all sell off non-core units which led to M&A deals in Ireland.