We are pleased to introduce our updated M&A review for Q3’23. It provides an overview of:

• M&A deal volume
• Q3’23 M&A Picks
• International & PE acquirers
• Sector trends
• Fundraising activity
• M&A outlook

Irish M&A deal volumes have experienced an increase quarter on quarter however they are still marginally down year to date. 118 deals were completed in Q3’23, in comparison to 112 in Q2’23. Looking at the bigger picture, for the first nine months of the year, Irish M&A deal volumes have experienced a slowdown with 316 deals completed as of Q3’23, compared to 333 in the same period last year.

The Financial Times reported that globally the value of merger and acquisition deals announced in the first nine months of the year equated to c. $2tn. This was the lowest level since 2013, down 28% vs. the same period in 2022.

Mega M&A deals are languishing at a 10-year low. With interest rates rising and debt capital markets tightening, it appears the mega deals are slowing down faster than the traditional mid-market SME deals.

M&A DEALS YEAR TO DATE

Fig 1 outlines deal volume year to date Q1-Q3 for 2021-2023 accompanied by the respective percentage changes from period to period.

Note the 65% spike in Q1-Q23’21 is caused by the rebound in deal activity following the easing of COVID-19 restrictions.

M&A DEALS BY QUARTER

Fig 2 outlines deal volume per quarter from Q1’21 to Q3’23 accompanied by the respective percentage changes year on year

Q3’2023 M&A PICKS

The below table provides a selection of high-profile Q3’23 M&A deals with respective values, as captured by our weekly M&A newsletter

PRIVATE EQUITY ACTIVITY

Fig 3 outlines PE deal volume year to date Q1-Q3 for 2021-2023 accompanied by the respective percentage changes from period to period.

Note the 76% spike in Q1-Q23’21 is caused by the rebound in deal activity following the easing of COVID-19 restrictions.

Fig 4 outlines the volume of PE transactions per quarter from Q1’21 to Q3’23 accompanied by a breakdown into the volume of deals executed by International and Irish PE firms over this timeframe.

International acquirers continue to snap up Irish businesses, accounting for over 40% of total M&A transactions in Q3’23.

Ireland is an attractive market for international players for a myriad of reasons, such as;

• Access to the EU and a strong SME sector with > 270k SMEs currently operating in the country.
• A skilled workforce with Eurostat reporting the Irish workforce is the most educated in the EU.
• A low corporation tax rate and supportive business environment have encouraged several multinational companies to set up headquarters and regional offices.

Conforming with expectations, acquirers from the US and the UK accounted for the majority of inbound acquisitions.

Construction Services Sector Leads The Way

There were 12 deals in the Irish construction services sector. DCC plc made 4 acquisitions including that of Solcellekraft, one of Norway’s largest Solar PV businesses.

Acquirers are attracted to this space with the government committing to significant investment in infrastructure projects, which will see a range of investments in roads, bridges, public transport, renewable energy generation and housing. A report by the Banking & Payments Federation suggests that total housing completions this year could reach over 30,000 units.

FUNDRAISING IN NUMBERS

Fig 5 breaks down the fundraises in Q3’23 based on the fundraise amount. Fig 6 outlines the volume of fundraises and the total value of all fundraises per quarter from Q1’21 to Q3’23.

Overall, Irish M&A activity experienced increased deal volume, up 10% YOY and 5% compared to Q2’23. This has coincided with a global slowdown in dealmaking and follows a YTD decline in Irish M&A deal volumes.

There are challenges ahead for M&A activity with high interest rates, inflation, and geopolitical tensions cultivating a difficult economic environment. Globally and domestically, there have also been several regulatory changes that will further slowdown the deal-making process with the proposed Screening of Third Country Transactions Act, the new EU Foreign Subsidies Regulations which took effect in July adding further hurdles to existing merger control and FDI regimes.

Despite these concerns, there are also reasons for optimism:

• Globally, there is capital available that needs to be deployed and Ireland presents itself as a good option for those looking to access the European market.
• There is also a cautious optimism that the looming recession may not be as severe as once feared.

Soirce: The Renatus weekly M&A newsletter was the main source of our report data.

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