Digital Transformation Driving Change in the Profile of Irish Tech Deals
The rise of digital adoption and the implementation of digital transformation strategies in recent years has led to significant M&A growth in the technology space.

 

The rise of digital adoption and the implementation of digital transformation strategies in recent years has led to significant M&A growth in the technology space. As new technologies such as 5G, AI, machine learning and the Internet of Things have become key drivers of change, they have appeared more and more as target businesses in the deal landscape. 

As previously explored in our series, there are many factors that should be considered when deploying digital transformation strategies. One way in which companies can quickly deploy digital transformation is by acquiring businesses with existing technologies and talent. Below, our Corporate/M&A team considers the Tech M&A landscape in Ireland. 

Irish Tech Deals 

M&A Surge in 2021

2021 was a bumper year for acquisitions of technology companies in Ireland. As outlined in the William Fry M&A Review 2021, published in association with Mergermarket's report earlier this year, Ireland saw: 
  • 240 transactions;
  • a 33% rise on 2020; and
  • the highest deal volume on Mergermarket record since before the financial crisis.

The two most active sectors were financial services and technology, medial and telecoms (TMT) accounting for almost 30% of deal activity by volume. TMT, and in particular technology, saw the largest proportion of deal activity. Ireland's well-developed FinTech ecosystem also came to the fore, with the acquisition of Fenergo (advised by William Fry).

Has Growth in Tech Transactions Continued in 2022?

2022 began as another reasonably strong year for technology-related deals in Ireland. As reported in our Half Year report, during H1 2022 Ireland saw a total of 122 M&A deals worth €6.4 billion (with 5 deals worth over €500 million). The largest tech deal in H1 was the acquisition of Version 1 by Swiss PE firm Partners Group (on which William Fry advised alongside Clifford Chance), valuing Version 1 at over €800 million. 

Why Tech Companies Choose Ireland

 In William Fry's Global Trends in Technology and Data report published last year, data-related regulatory issues were identified as the most important factor in selecting where to locate data-related investments in the EU. Ireland's regulatory regime is seen as the gold standard, with a wealth of talent available to indigenous and inward-bound companies looking to capitalise on the young and highly educated workforce living here. This is coupled with the fact that Ireland is the only remaining common law jurisdiction within the Eurozone and has a beneficial geographic location between time zones in the US, Europe and the Far East. Ireland remains in a unique position to continue to attract worldwide investment attention. 

In addition, Ireland has an outstanding track record for attracting inward investment. According to the IDA, one third of multinationals in Ireland have had operations in the country for over 20 years, illustrating the longevity and commitment of these companies to Ireland. Ireland has been chosen as the base for EU HQs or significant operations by 9 of the top 10 US technology companies, all of the world’s top 10 pharmaceutical companies, the top 5 global software companies, 14 of the top 15 medical technology companies, 8 of the top 10 industrial automation companies, and 8 of the top 10 financial services companies. This shows the uniqueness of Ireland as a jurisdiction of choice for both indigenous and international technology companies.

Conclusion

The ability of Ireland to attract many of the new businesses capitalising on digital transformation trends and the value they can bring has meant that Ireland's M&A market has been heavily influenced by the presence of these businesses in Ireland. 

Contributors: Ronan Shanahan, Louise Murray and Róisín Culligan.

Key Contacts

Ronan Shanahan Partner

Louise Murray Associate

Roisin Culligan Associate