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High-Performing Traditional SMEs



A lot has been written in recent months about the performance of technology companies and for good reason. At the time of writing, Information Technology companies currently represent over 25% of the S&P index on a market cap basis, making it the largest individual sector constituent.

For a number of years, technology companies were star performers with their share prices outperforming most other segments of the market. The pandemic acted as a windfall for many of these companies. It forced many businesses to adapt by digitising how they worked and operated.

However, in recent times this sentiment seems to have shifted with tech valuations re-rating to more normalised levels along with well-documented large-scale layoffs in the sector. At the time of writing, the Nasdaq Composite, a tech-heavy index, is down roughly 33% for 2022.

High-profile fundraises such as Wayflyer, Flipdish, TransferMate Global Payments and others have been well-publicised this year. There has been a lot less column space dedicated to high-performing smaller, more traditional businesses. There are a large number of businesses outside of the tech space that provide essential products and services and have a strong track record of delivering consistent growth in the long-run.

In many cases, what we’ve seen is that when these high-performing, traditional SMEs reach a certain level of scale, they are acquired by foreign buyers operating in similar or adjacent sectors. This can be due to a myriad of reasons such as access to Ireland’s skilled workforce, access to the Irish market which is seen as a gateway to Europe as well as access to new technologies and capabilities.

What makes these Irish traditional SMEs attractive to foreign acquirers? Obviously, there are specific circumstances that dictate the attractiveness of each acquisition on a case-by-case basis but when you dig deeper into a number of these acquisitions, a couple of broad recurring themes present themselves:

1. Fragmented Market Structure:

A lot of these traditional businesses operate in markets that are more fragmented in nature. The products and services that they provide tend to be geared toward servicing local market demand. This market structure facilitates buy-and-build / roll-up strategies by larger operators. Buy-and-build plays are attractive because they give acquirers the opportunity to create value through potential (1) revenue and/or cost synergies as well as (2) multiple arbitrage.

UK-based Phenna Group is an interesting player in the testing, inspection, certification and compliance services (“TICC”) sector and looks to be executing a buy-and-build strategy in this sector. Phenna Group has been an active acquirer of Irish companies operating in this space having acquired Building Envelop Technologies (2019), ASM Group (2020), Corporate Access Legal Services Group (2020), Complete Laboratory Solutions and most recently Maurice Johnson & Partners (2022). Phenna Group has been rolling up operators in the TIIC space for a number of years now which has helped to grow its turnover to >£300m.

2. Irish Economy:

The Irish economy has been one of the better performers in recent times with our GDP growth outpacing many of our European neighbours. Acquiring a company that is operating in robust economic geography is an obvious positive for international acquirers. In addition, there are structural tailwinds playing out in certain segments of the Irish market that make it an attractive market to operate within.

UK-based Wolseley’s recent acquisition of Heat Merchants, Tubs & Tiles and Hevac is an example of an international acquirer that could be looking to take advantage of structural tailwinds playing out relating to the fundamental undersupply in the Irish housing market. Wolseley acquired the three businesses which provide plumbing and heating services, tiles and bathroom materials in April this year. The strategy here could be akin to that of “selling pickaxes to miners during a gold rush” where it might be better to try and indirectly benefit from a structural tailwind by playing at a different point within its value chain.

3. Multinational Company (“MNC”) Presence in Ireland:

It’s no secret that Ireland punches above its weight when it comes to the number of MNCs it has. Irish companies providing products and services to these blue-chip MNC’s may provide an attractive point of entry for foreign acquirers looking to access high-value customers. As part of servicing these MNCs, many Irish businesses have also developed specialist capabilities that are valuable at a global level. In particular, Ireland has a strong domestic medical device and pharma sector and has an excellent track record of attracting foreign investments from this sector.

Label Crafts acquisition by the Belgian Asteria Group is an example. Label Craft was established in 1984 and is a Dublin-based packaging business that manufactures self-adhesive labels, leaflets, packaging and cartons. Many of Label Craft’s end customers are in the pharmaceutical and medical device spaces, a very attractive end market for packaging operators. Asteria has a presence across Europe but the Label Crafts acquisition provided it with a base in the Irish market. Label Craft generated revenues of c. €9.5m and an EBITDA of c. €2.8m in FY Dec’21.

4. Irish Market Leaders with International Potential:

The Irish market has a number of well-recognised market-leading brands with strong potential to scale globally. Foreign acquirers with knowledge of local markets, as well as the resources and capabilities to ramp up in the target geographies, can make attractive homes for Irish brands.

Fulfil Nutrition is a good example of a market-leading Irish brand that has taken on foreign investment and gone on to scale internationally. Fulfil Nutrition was founded in 2016 and is a producer and distributor of protein bars. In 2019, The Hershey Company made a minority investment in the company and more recently in 2022 Fulfil Nutrition was acquired by Italian multinational chocolate manufacturer Ferrero. Fulfil Nutrition has been on a phenomenal journey, growing revenue from €11.3m in FY Dec’16 to €37.9m in FY Dec’21.  Today it has a presence in Ireland, Britain, Netherlands, Belgium, Australia, the Middle East and North America.


Activity in the technology space will likely continue to dominate the business headlines. However, foreign companies acquiring more traditional businesses in Ireland is a trend that is likely to continue in the coming years as international businesses seek to take advantage of Ireland’s favourable business environment and strong economic growth. The potential benefits of these acquisitions can be significant for both sides.

Disclaimer: This article was written by Conor Michigan of Renatus, in partnership with the Business Plus Magazine.


Renatus was established in 2014 to provide growth funding to growing Irish SMEs and to partner with ambitious management teams to help companies reach their full potential.
Renatus targets companies with sustainable earnings of €1m+ and valuations of €5m and above. Our typical solutions include:
  • Succession Planning
  • Management Buyouts / Buy-Ins
  • Funding for organic growth
  • Acquisition Funding; and
  • Share Sales

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