More than a third of Irish businesses would consider merging with or acquiring another firm over the next 12 months to access skills and talent, a new survey from professional services group Aon has revealed.
Based on a poll of 331 businesses of all sizes in the Republic, the British-American firm’s 2024 M&A report indicates a strong appetite for deal-making among Irish companies after a down year in 2023. Some 35 per cent of survey respondents said they would consider or are actively considering engaging in M&A activity over the next 12 months.
Ranking their top reasons for seeking out a transaction, 42 per cent of companies cited protecting and growing their market share while 38 per cent said they would do a deal to improve business efficiencies.
Just over one in four said they would acquire or merge with a business to access talent. This was particularly important in the health and pharma sector, said Aon, with 35 per cent of respondents in those industries citing it as the top reason for deal-making.
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Human capital issues are also becoming a key consideration for businesses in the Republic when doing their due diligence on a potential M&A target, said Aon. More than half of respondents said talent and personnel considerations were the biggest potential areas of risk when approaching a deal.
Just 11 per cent of businesses said they did not consider it at all during a deal process, down from 21 per cent last year.
The report’s authors said the renewed focus on personnel in the process is a reflection of Ireland’s status as “a high-skills economy and the tight labour market”, which continues to put upward pressure on wages and salaries. It also reflects concerns about recent and inbound changes to employment legislation, including sick pay entitlements and new EU pay transparency regulations.
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Asked to cite their top human capital considerations when conducting due diligence on a potential deal, 55 per cent of businesses said staff retention while 43 per cent identified employee compensation and benefits comparisons between their company and the target business.
Overall, the outlook for M&A activity remains strong, according to Clodagh Rochford, head of M&A at Aon Ireland, “given the high rate of successful transactions and possibility of further interest rate cuts in the second half of the year”. However, she said that “with significant legislative changes on the horizon and heightened geopolitical tensions”, the risk environment continues to “grow in complexity”.
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