M&A activity in Ireland fell by almost a third during the first quarter of 2023 as uncertainties around inflation and the future trajectory of interest rates, coupled with transatlantic banking volatility, impacted M&A deal activity.
According to statistics from Mergermarket analysed by Interpath Advisory (accessible here), a total of 72 deals were completed in Q1 2023 compared to 105 deals completed during the same period in 2022. The numbers are also well below the activity seen during the final quarter of 2022, when 120 deals were completed.
Some of the marquee deals of the first quarter of 2023 included the sale of Kerry Group’s sweet ingredients portfolio to IRCA for approximately €500 million; renewables company Amarenco’s sale of a 30% stake to the investment group Arjun Infrastructure Partners for approximately €300 million; and Ion Group’s acquisition of a 7% stake in the Israel-based trading platform eToro valued at over €200 million.
Despite the decline in deal activity, Kevin Brett, head of transaction services at Interpath Advisory in Ireland believes there is still plenty of cause for optimism. He said: “While M&A activity across Ireland was subdued during the first quarter of 2023, an improving macroeconomic landscape, coupled with healthy levels of dry powder amongst investors, means there are strong indications that dealmaking will bounce back in the months ahead.
“After initial forecasts that 2023 would see an economic slowdown, the most recent report from the Economic and Social Research Institute (“ESRI”) suggests that Irish GDP will increase by 5.5% for 2023, raised from the 3.0% forecast in December. Furthermore, the outlook for inflation has improved with the ESRI forecasting that this will fall to 4.5% for 2023, down from their earlier prediction of 7.1%. Coupled with Ireland’s highly educated and innovative workforce, and our favourable corporate taxation system, the outlook for continued foreign investment in Irish companies from Europe, the UK, US and further afield remains bright.”
Kevin Brett added: “While private equity activity in recent months has been constrained predominantly due to increased interest rates, it continues to form a significant part of the M&A deal market in Ireland. Interestingly in March, the private equity firm Cinven decided against funding their acquisition of MBCC with debt financing, instead, preferring equity with a view to refinancing in the future in a more favourable debt market. This is a trend worth observing as to whether other private equity firms will follow suit as they look to take advantage of lower-multiple valuations for companies.”
