In line with international deal activity, Ireland’s mergers and acquisitions (M&A) market slowed in the first half of 2023.
M&A worldwide has reduced as rising interest rates, high inflation and fears of a recession have impacted confidence and made acquisitions more expensive. The Financial Times recently reported that global M&A fell 38% to US$1.3 trillion in the first half of the year, the lowest since the start of the pandemic in 2020.
The Irish economy itself is showing notable resilience. The International Monetary Fund expects our economy to expand by 5.6% over the course of 2023. This is a GDP measurement, often criticised for distorting the “real” Irish economic growth rate. Nevertheless, the Economic and Social Research Institute (ESRI) is forecasting Modified Domestic Demand growth of 3.6% this year and 4% next year. This compares very favourably to just 0.7% growth across the European Union as a whole1. Similarly, inflation in the country has been relatively modest compared to many of Ireland’s EU peers (even if it does not necessarily feel that way when doing the weekly shopping).
Despite some positive macro-economic indicators (at least in relative terms), the Irish M&A market has inevitably been impacted by the global slowdown in activity. The first six months of 2023 saw 177 deals involving Irish businesses, collectively worth just over €5.2bn. Year-on-year (YoY), that represents a minor decline of 2% in volume but a more substantial -58% decrease by value.
The shape of Ireland’s M&A market in the first half of the year was similar to previous years, with 97% of transactions falling into the mid-market segment; of the 51 first-half deals where the value was disclosed, 45 of them were valued at between €5m and €250m. The top end of the market however was particularly quiet, with just three deals worth more than €500m announced during the first half. The biggest recorded deal of all saw Chiesi Farmaceutici agree to pay €1.34bn for Irish head-quartered Amryt Pharma, another sign of the influence of the international pharmaceutical sector on Irish M&A statistics in recent years. The next largest deal was the recent sale of Enva, the waste management company, by one private equity house to another.
Despite the various uncertainties it is safe to assume that we will see more healthcare and private equity deals as the year progresses.