Irish M&A deal value drops sharply but deal flow holds

Mid-market deals continue to make up the bulk of activity

On the legal side Arthur Cox was the clear market lead, advising on 19 deals including some of the year’s biggest.

Donal O'Donovan Twitter Email

June 30 2022 02:30 AM

The value of Irish merger and acquisition (M&A) deals plunged in the first half of the year after a bumper 2021, according to data from Refinitv prepared for the Irish Independent.

Deals with a combined value of €18.8bn were announced in the first half of 2022 compared to a combined €63bn in the first six months of 2021 when deal making had reopened with a bang after the first year of lockdown. Deal flow dropped to 283 from 340.

The sharp drop in the overall value of deals is not impacting the Irish mid-market which makes up the bulk of activity, according to Paul Tuite, head of PwC Ireland’s M&A and Deals practice.

PwC advised on more Irish M&A transactions than any other financial adviser in the year so far at nine, versus Clearwater International’s seven and well ahead of most domestic and international rivals. On the legal side, Arthur Cox was the clear market lead, advising on 19 deals including some of the year’s biggest.

Mid-market activity levels in the first half were similar to 2021 and the pipeline of early stage sales processes does not point to a slow-down, Paul Tuite said.

“That may change, there is a lot of talk about clouds on the horizon – rising interest rates and possible recession – but we are seeing strong demand from trade and private equity buyers if you have a good business to sell,” he said.

The inflation pinch and signs of a spending cool-down may see buyers take a harder look in terms of valuations at consumer facing businesses in particular but that’s less of an issue here than in the UK, where exposure to consumer demand is now seen as risky, he said.

“This is still a high growth economy and we see people still want a presence,” he said.

While corporate mega deals were less of a feature, there were some very large transactions including two from CRH; a sale of US unit OIdcastle Building Envelope (€3bn) and an acquisition of Barrette Outdoor (€1.7bn), a timber products business also in the US.

Aircraft leasing giant SMBC’s acquisition of Goshawk for a reported €1.5bn and the €1.3bn purchase of Hibernia Reit also bumped up the value of transactions.