Upward deal trajectory to continue in 2025
Upward deal trajectory to continue in 2025
Katharine Byrne, Partner & Head of Deal Advisory recently featured in The Irish Times Special Report on Mergers & Acquisitions. Read her commentary below.
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.
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