Following a strong start, merger and acquisition activity continued to power ahead in Ireland and internationally in 2024.
M&A values increased in the period to September globally, while the expectation of market watchers in Ireland was for a fourth consecutive full year of around 400 deals, which compares favourably with historic levels. Early signs for 2025 are encouraging too.
“We anticipate the recovery in M&A that has picked up momentum in Q4 2024 to continue into 2025. There is a clear upward trajectory of deal volume and while some economic headwinds remain, we believe that as borrowing costs decrease, the growth that has been driven by corporates will be further bolstered by private equity,” says Gerard Ryan, head of corporate at Eversheds Sutherland.
The year of elections is drawing to a close, which Ryan hopes may remove some uncertainty from the market. And while some see Donald Trump’s US election victory as a potential source of turbulence, Ryan is more optimistic.
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“With elections having taken place in the UK and the US, it is hoped that the political and economic environment will provide boards with some level of certainty and the stability to support M&A activity,” he says. “The US election and a Republican presidency will likely bring lower taxes and bigger deficits in the US. Both macro trends will support growth and equity market valuations, and the confidence in growth should be a positive for M&A activity, provided the threatened increase in US tariffs do not act as a counterweight.”
Reduced regulation was a theme of the Trump campaign, and the prospect of less regulation in certain sectors, particularly banking and crypto, as well as the traditional oil and gas industries, is already driving enthusiasm in those sectors, says Ryan.
“A lot of what has driven down M&A activity in recent years has been uncertainty and election results have removed a significant element of uncertainty, with an expectation of pro-business policies expected to drive an uptick in activity,” he adds. “We are likely to see an increase in protectionism, deglobalisation and higher tariffs during the Trump administration, however, and this will cause a shift in M&A activity with perhaps greater focus on local targets rather than geographic expansion and an increased investment in vertical integration.”
Looking at the Irish market, the third quarter was particularly strong, with 121 deals, an 11 per cent increase in the second quarter, notes Jonathan Simmons, director, Davy Corporate Finance. The most active sector was tech and telecoms, followed by industrials. Notable deals included three acquisitions by CRH, Kingspan’s acquisition of US-based IB Roof Systems, Prodieco’s acquisition of GEMEL Precision Tooling in the US and the acquisition of Kyte Powertech by R&S Group.
“Sector consolidation across professional services and insurance broking, along with continued Irish plc M&A activity, private-equity-owned platforms continuing bolt-on acquisitions and a positive macro backdrop resulting in reduced cost of capital have all provided for a positive M&A market and will continue to support it into 2025,” says Simmons.
Private equity is a now a key driver of the M&A market in Ireland says Katharine Byrne, partner, head of deal advisory at BDO Ireland. “We are now in the teenage years of private equity in Ireland. Our first formal funds were established over a decade ago and with the first of these now exiting out of their first or second investments you are starting to see and hear about the success of those businesses.”
Local funds that would have brought enterprises to a certain scale are now selling out to large international funds. Ireland is seen as an attractive location because of access to the EU and ease of doing business here.
“The first institutional investor has probably put the structures and processes in place for those companies to enable them to be much more scalable, much more ambitious and therefore of greater interest to larger private equity funds,” says Byrne.
As well as financial services, there has been an increase in transactions across the broader healthcare sector including the dental, veterinary and skincare professions.
“In many cases it will align with a succession plan, proving the opportunity for founders to take some cash off the table and achieve financial freedom without having to exit the business.”
Byrne says the overall health of the M&A market in Ireland lately can partly be put down to an overhang from Covid which delayed transactions in certain sectors.
“While they may have had sticky client bases and strong management teams, vendors still needed to prove their capacity to sustain strong profitability in order to get closer to the valuations that they were expecting,” she says. “As we got to two or three years out from Covid that was easier to prove.”
Another interesting factor driving M&A is decarbonisation, she points out. In the same way that many businesses sought acquisitions as part of their digital transformation agendas a few years ago, where this was seen as the most efficient way to acquire these skills, this is now happening with companies seeking to meet their ESG requirements. Companies are acquiring businesses with complementary skills in this area, sometimes down their supply chain, Byrne explains.
Byrne is optimistic overall for the M&A market prospects for 2025, noting that recent reductions in interest rates are lowering costs for those buying with debt and enabling deals to be done faster, while corporates with cash on their books may be more inclined to deploy that money to get better returns, including considering more M&A deals.