Ireland’s merger and acquisition (M&A) market performed steadily in 2012 against a backdrop of the Eurozone slipping back into recession.  A total of 82 deals (down from 85 in 2011), with an aggregate value of €17.1bn (up 18% from €14.5bn in 2011), are recorded in the annual William Fry M&A Review published today.  This performance was driven by Irish companies increasing their market share worldwide, with outbound activity eclipsing both inbound and domestic activity for the first time.

There was a trend towards deals of a larger value in 2012, with four deals each valued at more than €250m taking place. Small and midmarket transactions were not as strong, with only 11 deals in the €5m – €15m range.

Financial Services Sector Saw Two of the Three Largest deals in 2012
Globally, financial services deals are down both in size and number. However, in Ireland, financial services remained buoyant in 2012, accounting for 18% of overall deal volume and 38% of deal value at €6.4bn.  This sector saw two of the three largest deals with Sumitomo Mitsui Financial Group’s €5.7bn purchase of the Royal Bank of Scotland’s aviation leasing business, and the €449m purchase of Goldman Sachs hedge fund administration services business by State Street.   

Resilience in Outbound International Deal Making
For the first time, Irish outbound M&A activity comprised a larger share (41% with 58 deals) of Irish deal-making than inbound (38%) and domestic (21%) M&A.  With the turbulent economic times experienced by Ireland in 2012, the fact there has been no decline in this area highlights the strength of Ireland-based corporates and their ability to compete globally.  Their growth overseas will help contribute to a stronger recovery at home.

Private Equity continues to decline
2012 saw a continued decline in the level of private equity M&A activity with volume and value decreasing by 20% and 70% respectively year on year. However, these numbers belie a strong appetite for Irish assets as the M&A figures do not include loan book and property. In the aftermath of the crisis, loans and commercial properties with distressed pricetags are being acquired by some of the biggest global buyout firms, including Kennedy Wilson, KKR and Apollo Global Management. While this interest did not directly translate into rising buyout activity in 2012, the continued interest from abroad in Irish assets including loans and commercial properties indicates Private Equity activity outside the pure M&A sector throughout 2013.

Technology Sector tipped for a busy 2013
The technology/software sector was quieter in M&A terms in 2012, but we are seeing ongoing investment in tech companies and it is tipped as an area for growth in 2013 and going forward, given the TMT businesses announced for sale in the last six months.  This hints at a new phase of growth in M&A for Ireland’s technology sector spurred by the Government’s active interest in supporting tech start-ups.  While most activity in this sector still takes the form of venture capital funding, larger transactions should soon follow.

Sale of State Assets
2013 should also see M&A activity in relation to the sale of State assets. Financial and legal advisers have been appointed to advise on the sale of Bord Gáis Energy, a division of Bord Gáis Éireann. It is anticipated that steps will be taken to bring other State assets to market during 2013.

Bryan Bourke, Partner and Head of Corporate and M&A at William Fry says that 2012’s figures build on a solid performance in 2011 and show steady recovery since the lows of 2009.  “Irish M&A performance in 2012 was steady with inbound activity remaining vibrant as in 2011 and Irish outbound acquisitions rising to an all-time high. The M&A market in Ireland appears to be on the path to recovery and, albeit against a backdrop of continued global economic uncertainties, there is cause to be hopeful of good performance in 2013 across a variety of sectors, particularly technology, pharmaceutical, medical and biotechnology.”