'Strong outlook for 2019 M&A deal-making'
Companies 'cautiously optimistic' despite Brexit and global uncertainties, finds KPMG annual predictor
THE Irish mergers and acquisitions market is expected to remain strong this year, with plentiful debt available on attractive terms which will keep valuations high, according to KPMG's deal outlook for 2019.
Even Britain's contorted and potentially lengthy exit from the European Union could present opportunities, rather than weighing on deal sentiment and flows, the consultancy said.
"The deal-making community is cautiously optimistic about the year ahead, with the vast majority of respondents expecting 2019 deal volume at or above prior year levels, despite current global macro-economic uncertainties," the survey said.
Technology, healthcare and agribusiness and food will be the most active sectors, respondents said, and deals in these areas would attract interest from international players.
Private equity is expected to cement its growing role in mergers and acquisitions with exits from initial investments taking place so as to free up capital for new deals.
"This cycle of investment, growth and exit is now well established as a clear and attractive funding option for Irish companies and is anticipated to continue throughout 2019," the survey said.
It found that 52pc expected deal activity to remain broadly similar to the levels seen in 2018, while 35pc expected increased volumes and 13pc expected the flow of deals to slow.
Brexit was seen by 44pc as having a negative impact on deal flows this year, although there are some who believe it could act as a catalyst as UK businesses might wish to buy Irish companies as a defensive move to cut regulatory and supply chain risks.
"Similarly, 2019 may present opportunity for progressive Irish companies to acquire/build positions in the UK market through strategic acquisitions," it found.
The optimism in KPMG's Irish survey stands in sharp contrast to concerns being expressed over a downturn in the global economy and levels of corporate debt.
A report issued by the Institute of International Finance (IIF) this week showed global debt has grown by over 12pc since 2016 to hit $244trn (€213trn) at the end of the third quarter last year, with the corporate sector accounting for more than a third of the rise.
In the past decade, non-financial corporate debt has risen by $27trn (€23.6trn) to more than $72trn (€63trn) and is now equivalent to 92pc of global economic output - a record number.