Ireland’s mergers and acquisitions (M&A) market enjoyed a year of deal activity not seen since before the financial crisis according to Shane O’Donnell, head of Corporate and M&A at William Fry, in the fourth edition of William Fry’s Annual M&A Report published today.
Deal activity has continued to increase year on year with 115 deals in 2014 up from 84 in 2013 representing an increase of 37%. Deal value also enjoyed a banner year increasing by 139% year on year to €42.9bn, unquestionably driven by Medtronic’s €33.9bn purchase of Covidien in late 2014.
These positive developments echo the broader trend of recovery seen across Europe and the globe. In Ireland’s case, this demonstrates not just a return to the pre-crisis status quo, but genuine, dynamic growth. European M&A volume grew just 9% in 2014 compared to Ireland’s 37% over the same period.
The increased activity was also driven by macro-economic factors. The European Commission announced that Ireland was the fastest growing economy in the EU in 2014 at 4.8% growth compared with just 1.3% for the EU as a whole over the same period. Unsurprisingly, Ireland’s early exit from the bailout in late 2013 instilled confidence internationally around the country’s future growth prospects. Closer to home, financing levels have shown signs of moderate improvement over the past 12 months. Despite bank lending remaining somewhat restricted, other trends in financing, including the presence in the market of alternative finance providers have contributed to the increase in activity in 2014.
Key findings in the report include:
M&A deal value of €42.1bn is the highest since 2000. M&A volume up 37% compared with 2013
Number of outbound deals is highest on record (since 2000)
Inbound deals at their highest on record ( since 2000)
Significant growth in volume of mid-market deals with the number of deals under €100m increasing 81% in 2014 to 58 deals
81% of M&A deal value concentrated in the pharma, medical and biotech sector
Key sectors by deal volume: telecomms, media and technology (23%); leisure (17%), pharma, medical and biotech (14%); and financial services (11%)
Private equity (PE) in Ireland also prospered in 2014 with 30 deals compared with 18 for the whole of 2013. Additionally, the value of PE deals this year was ten times that of last year with a number of notable deals including Charterhouse Capital Partners’ €1.7bn buyout of online learning company SkillSoft and the €450m purchase of a stake in car rental service CarTrawler by BC Partners.
Encouragingly, buyouts involving premium Irish assets are becoming increasingly common. In the immediate aftermath of the eurozone crisis, PE firms targeted distressed assets and in particular property and non-performing loans. However, as fundamentals improved over the past few years, PE firms, both at home and abroad, appear focused on the acquisition of fast-growing, cash-generative assets across a range of industries. Indeed, buyout volume and value were at their highest points since 2006, with 22 buyouts totalling €2.8bn.
Shane O’Donnell, partner and head of Corporate and M&A at William Fry says that 2014’s figures build on a solid performance in 2012 and 2013: “The Irish M&A market continues to show signs of sustained recovery, this year demonstrating growth not seen since before the financial crisis. Positive indicators in private equity coupled with improved economic conditions have undoubtedly spurred this growth. 2014 also saw a larger number of small to mid-cap deals with the number of deals under €100m increasing 81% in 2014 to 58 deals, a resoundingly positive sign for Ireland’s business community and a significant vote of confidence which bodes well for a strong 2015. We expect to see 2014’s positive momentum continue into 2015, with anticipated M&A activity across a range of sectors as Ireland remains on track to be the fastest growing economy in the eurozone this year.”