Prepare carefully to optimise the value

Katharine Byrne, Head of Deal Advisory, highlighted in The Business Post that careful preparation is key to optimising value in mergers and acquisitions. She stressed that strategic planning and choosing the right private equity partner are crucial for successful transactions. Read her full commentary below.

While the mergers and acquisitions market in Ireland remains strong, experts advise that companies must prepare carefully and fully before approaching the market – as demonstrated by successful companies recently.

“During 2024, BDO ran a series of events around the country to share the stories of companies that had partnered with private equity,” commented Katharine Byrne, head of deal advisory at BDO Ireland. “Each business, despite their differences in sector and size, emphasised the importance of preparation for transactions and selecting a private equity fund that aligns with both culture and strategy.”

In addition, Byrne says that deals are taking longer to complete and need to be carefully structured in order to mitigate risks. “The challenge for many companies is running their business and staying focused while working on a deal in the background. This is where careful preparation is key – and including advisers in strategic planning from an early stage is important.

“Early preparation means that by the time you go to market, you have identified the type of buyers you want to approach and you can manage that type of engagement in a much tighter timeframe. By making sure all is in order before approaching the market, you are ensuring that the value of the business is optimised and management are confident in their growth strategy and are prepared for the transaction process.”

Seller’s commitment
“An adviser also provides a buffer by acting as a project manager, taking the strain from the management in terms of the day-to-day running of the transaction. Our role is to keep an eye on the regulatory, political and economic environment while the process is unfolding, and ensure we address any potential issues as they arise, and address them early.”

Regulation is a key concern, and one that can be managed by the right adviser too. “For many transactions, vendor due diligence is a pre-requisite as it demonstrates the seller’s commitment to the process while attracting more buyers. But it’s not just financial, tax and legal due diligence that is required. Buyers are looking to derisk as much as possible and the due diligence programs can span across commercial, technical, IT, HR and ESG. The latter is increasingly important with the introduction of CSRD reporting and all companies need to be aware of their requirements and the impact on their customers and their supply chain.
The “Trump bump” will drive M&A activity in the US, which will naturally follow into the tech sector in Ireland
Katharine ByrnePartner and Head of Deal Advisory

“Regulatory and policy changes will continue to affect M&A activity, influencing approval processes and creating uncertainties around outcomes and timelines. Dealmakers must also address challenges related to foreign direct investment restrictions and security considerations. Additionally, M&A processes face increased scrutiny due to evolving data privacy laws, cybersecurity threats, and regulatory frameworks focused on ESG. These factors are influencing how companies structure, evaluate, and execute deals. Irish companies must keep a very close eye on the regulatory environment in which they operate and ensure they are compliant.”

All this said, there is much to be optimistic about when looking at the dealmaking market in Ireland. “There are a lot of private equity firms now focusing on Ireland because of the economy and the opportunity for consolidation in sectors such as insurance and financial services,” said Byrne. “This has moved into other fragmented markets such as veterinary, healthcare and dental. We’re also seeing other businesses, such as engineering, which are highly scalable and ambitious in their growth plans – that are attracting interest from international private equity firms. Rather than an outright sale to a buyer, the option of selling a stake to private equity is enabling Irish companies to incentivise the management teams through equity participation in future growth, which is particularly important for family businesses or owner-managed companies.”


Possible tariffs

“Success stories such as LGT’s investment in H&MV Engineering alongside Exponent are attracting the interest of Irish SMEs who are planning succession and seeking to derisk while ensuring their businesses have the funding to grow.

“Moving into 2025, the outlook for M&A in Ireland remains strong. The “Trump bump” will drive M&A activity in the US, which will naturally follow into the tech sector in Ireland. But the counter of this is increased regulation. Separately if you’re in any of the industries that are rumoured to be affected by possible tariffs from the US, this will create uncertainty that needs to be strategically managed when considering your M&A options.”

And what about the effect of AI on the market – will that speed up deals? Not necessarily, says Byrne. “We’re hearing a lot of talk of how AI will overhaul the dealmaking market, particularly for those on the buy side of the market. It will help buyers, especially international buyers identify the opportunities in the market, but ultimately transactions have to come down to people, and having that contact with the people in the business. We saw during Covid that people needed that face-to-face contact with deals; AI will help with some of the more mundane processes, but you still need to get people around the table.”

Overview of the Irish M&A Market in 2024