Private Equity Ireland: M&A H1 2022 Statistics

In the face of numerous macroeconomic challenges including inflation, supply chain constraints, the threat of rising interest rates, among other factors, the Irish M&A market has remained buoyant. There were 226 deals completed in H1 2022 compared to 200 in H1 2021. As you might expect, both periods saw significantly more deals completed than in H1 2020 which was more severely impacted by Covid. The question now is whether this level of activity can be sustained or whether it will succumb to the effects of these macro headwinds.

The primary category of acquirers in both H1 2021 and H1 2022 have been foreign businesses acquiring Irish companies, with H1 2022 being particularly strong. There are certain factors which may have enhanced the attractiveness of Irish businesses to foreign buyers. These include, but are not limited to:

• Brexit: Post-Brexit, Ireland has become an attractive base for companies looking to maintain an EU connection;
• Multinational Presence: Ireland has a strong SME sector, with the EU Commission reporting that SMEs account for 70.1% of total employment in the ‘non-financial business economy’, exceeding the EU average of 66.6%. A portion of these SMEs thrive in the ecosystem of larger multinational businesses which are based here. Irish SMEs that trade with these international businesses have a blue-chip customer group which is attractive to potential acquirers;
• Foreign Private Equity: There has been a recent influx of UK and European-based private equity entering the Irish market. An example of this in the past six months was Exponent’s investment in H&MV Engineering; and
• European Consolidation: The Irish market has become a target in European-wide consolidation plays. We have seen this in the nursing home sector with the likes of Belgian-based Aedifica being highly acquisitive in recent years. We have also seen it in the veterinary sector in the past six months, with Linneaus’ (ultimately owned by Mars) acquisition of Village Vets, among others.

Another notable trend is that there were no Irish IPOs in the first 6 months of 2022 versus three in the first half of 2021. This may be as a consequence of the volatility that has been witnessed in global equity markets.

Looking at M&A based on the sector of the acquired company, financial services and software were the two most active distinct sectors in H1 2022. The financial services sector has been active for quite some time, supported by the wave of consolidation sweeping through the sector. In particular, this has been witnessed in the insurance broking and compliance management parts of the wider financial services sector. Notable deals in the first half of 2022 included:

• Insurance broker INNOVU, which had previously acquired a number of Irish brokers in a private equity-backed roll-up play, was acquired by an American broker, Gallagher. This marked another significant exit by an Irish-based consolidator following Arachas which was sold in 2020 for an estimated €250m to Ardonagh Group, a UK peer. It will be interesting to see if more follow suit in the near future.
• Elsewhere, Waystone Compliance Solutions acquired two Irish businesses, KB Associates and Centaur Fund Services Ltd in the compliance management space.

There were also some landmark deals during the first half of 2022 for Irish businesses, two of which stood out in particular:

• JP Morgan acquired Cork-based Global Shares for a reported $730m. Global Shares provides software and services for employee equity share plan administration. It marked the culmination of a fantastic success story and one of the largest fintech exits in Irish history. It is also a great case study of how a supportive private equity partner can bring more than cash to the table and accelerate a business’ expansion. Motive Partners’ backing of Global Shares was described as “a seminal moment” in its journey by one of its early backers.
• eShopWorld (“ESW”) acquiring Scalefast for a reported $300m in May of this year is another that stood out. ESW became a unicorn itself when it was sold to Asendia in 2021. This deal is a great marker that the Irish-based business shows no signs of slowing down on its trajectory toward solidifying itself as a global leader in the eCommerce space. ESW has been on a phenomenal growth trajectory over the last couple of years with revenue growing from c. €211m in FY16 to c. €844m in FY20, its most recently filed accounts.

It has certainly been a strong first half of the year for Irish M&A which continues a positive trend since the worst of the Covid crisis. The question now turns to whether the momentum can be continued in the coming months and years ahead in the face of what undoubtedly very uncertain times for all businesses are.

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