Analysis

The state of the deal: M&A trends 2019

Our annual comprehensive look at M&A activity

Our M&A colleagues in the US have just released their sixth M&A trends report, which is based on a survey of 1,000 executives at US corporations and private equity firms. It focuses on deal activity in 2018 and the expectations of senior management teams for the next 12 months.

Given Ireland’s open economy, the importance of US capital here and the number of Irish businesses engaging in inbound & outbound M&A in the US and beyond, a number of key messages are particularly relevant for Irish dealmakers and those engaged in M&A more generally. We have distilled down the key messages which are relevant for an Irish audience, namely:  

  1. Respondents forecast strong deal activity in 2019 despite rising uncertainty
  2. There is significant appetite for cross border deals
  3. Divestures continue to be a critical element of the M&A landscape
  4. There is ample funding available for deals

Key takeaways for those in Irish M&A

As the Irish M&A landscape matures and sophisticated international investors continue to focus on the Irish market, it is helpful to understand key trends that are shaping decisions that allocate this capital. The majority of the trends in the US survey resonate in the Irish market; and we are seeing similar drivers of transaction activity and expectations for continued high deal volumes in our local market.

This insightful survey shows that, even in the face of uncertainty, M&A is expected to continue to be an integral driver of growth for US investors portfolios, as they look to divest mature businesses and deploy capital in overseas markets, all with the help of significant ‘war chests’.

The US market is vast; and leveraging relationships with the right funds and buyers for the right Irish assets is key. US buyers and investors also operate in highly competitive processes and have quite a different approach to their European counterparts; which need to be carefully managed. Continued strong activity levels in the US should create opportunities for Irish businesses acquiring in that market. However, readily available capital and strong competition is driving premium valuations for attractive businesses in competitive processes. As such, understanding the foreign market dynamics while also positioning with a trusted local partner will be crucial for Irish businesses looking to successfully acquire in the US.

In order to help drive sustained M&A activity, it’s up to those engaged in M&A here to ensure that Ireland is on the radar as an attractive destination for international capital. It’s also crucial that Irish companies are marketed and positioned correctly with key private equity decision makers and corporate acquirors.

Overall, we believe that this all should translate into another year of strong M&A activity, even in the face of rising macro-economic uncertainties.

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