IBI chief says ‘good time to sell businesses’ as clouds gather

The head of IBI Corporate Finance, Ireland's leading mergers and acquisitions adviser, has said that now is a "good time" to sell a business as valuations remain "strong" even as borrowing rates are beginning to rise across bond markets and global geopolitical and trade tensions mount.

"We are experiencing a record stock market bull run and I believe it's not going to stay strong forever. So it is a good time to sell a business," said Tom Godfrey, chief executive of IBI, referring to the record nine-and-a-half by US stocks, which lead global equity markets.

Mr Godfrey noted that rising market interest rates – or bond yields – globally “will temper” valuations over the medium term as they dampen corporate earnings. Bond yields tend to move ahead of central banks moving official rates.

IBI, which has been involved in more Irish deals than any other adviser in the past decade according to Mergermarket, was acquired from Bank of Ireland 12 months ago in a management buyout (MBO) deal lead by Mr Godfrey and managing director Ted Webb.

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Sources said at the time that pay restrictions at bailed-out Irish banks were a determinant in IBI management’s move to business, as it put the company at a disadvantage to most other players in the Irish market in terms of attracting and retaining staff.

‘Notably buoyant’

Speaking to

The Irish Times

to mark the anniversary of the MBO, Mr Godfrey said the first half of 2018 had been “notably buoyant” for Irish M&A activity, with private equity buyers active on the ground and little evidence to date of

Brexit

having any significant effect on deal flow.

Mr Webb said that Irish firms with strong trading links with the UK are “seriously looking” at buying manufacturing businesses in the UK to deal with the expected fallout from Brexit, though few have made the financial commitment yet.

Mr Webb said the M&A market has been transformed since the financial crash in 2008, with a new wave of providers of debt and equity finance giving buyers more options and greater flexibility when structuring deals.

IBI, which has 22 employees, has recently expanded its services to include special units that advise on debt end equity fundraisings.