M&A activity for 2020 - opportunity in an uncertain trading environment

Our 2020 M&A outlook surveyed many of Ireland’s leading executives and M&A advisers for their insights on trends for the year ahead.

Findings show that 90% of respondents expect Irish M&A activity for 2020 to be at or above 2019 levels, despite a challenging trading environment. Prevailing macro-economic uncertainties may, however, be impacting the market in favour of buyers in 2020 as just 38% of respondents consider 2020 to be a “sellers” market compared to 60% in 2019.

2020 – Sector activity

Technology, healthcare & pharmaceuticals and agribusiness & food were identified by survey respondents as the sectors likely to see the most acquisitions in 2020 – perhaps reflective of the continued success of Irish technology companies in attracting the attention of strategic buyers globally.

“The scale of available capital in the market has undoubtedly contributed to our M&A leaders’ optimism for the year ahead and we predict that private equity dry powder and the robust and attractive debt markets will be key enablers for deals in 2020.”

Mark Collins

Partner & Head of Deal Advisory

Sustainability agenda to impact M&A deal-making in 2020

Unsurprisingly, climate change and decarbonisation is on the minds of Ireland’s M&A leaders, with 67% saying it will be a factor in M&A strategies in 2020. With increasing focus nationally and globally on sustainability issues, and expected movement of capital flows away from carbon intensive industries towards green investments, it is expected that deal makers will use M&A as a tool to pivot their business models.

“Changing investor attitudes towards sustainability will be an area to watch in 2020, as we expect this agenda to be factored heavily into executive decision making.”

David O'Kelly

Partner, Corporate Finance

What about Brexit?

Certainty regarding a Brexit outcome is considered crucial for deal activity in 2020. A key issue for deal makers in 2020 will be whether a new Free Trade Agreement will be agreed before the transition period ends at the end of 2020. For more opportunistic Irish companies, 2020 may still present an opportunity to acquire and build positions in the UK market through strategic acquisition.

Brexit outcomes and deal activity

Which of the following Brexit outcomes would facilitate greater deal activity involving Irish companies in 2020?

Deal failure

Valuation gaps continue to be considered the primary inhibitor of Irish M&A activity according to respondents, with 41% identifying this as the primary reason why deals fail. This is followed by unexpected diligence issues (26%) and lack of readiness (16%). From a seller’s perspective, the importance of deal readiness cannot be overstated.