Market strong for M&A activity, but challenges loom

The current market for mergers and acquisitions in Ireland is strong, but uncertainty around the Trump administration and possible tariffs means that choosing to right advisor to guide you through the deal process is more crucial than ever before.

“The environment for M&A in Ireland is supported by a stable political and tax regime, a strong economy, a diverse funding market with plenty of options around debt and equity available and Ireland’s location and language, which supports US access to the European market,” said John Bowe, Corporate Finance Partner at Forvis Mazars.

“Irish, UK, and European private equity is well capitalised and will continue to invest in quality assets. From a strategic buyer standpoint, there is an impetus from the EU to create European sector champions and reduce fragmentation, so we expect consolidation to continue across key industries.”

In terms of sectors, there are many reporting good activity levels right now, according to Bowe. “Data centre services, including engineering, power, logistics and operational technology, continue to attract huge investment and we expect this to continue, given the runway ahead in terms of data centre build. Irish companies are global leaders in this and are attracting investor and trade interest.

“Activity in insurance sector consolidation is continuing at a slower pace. We expect this activity to continue but at a reduced level, as the number of targets decreases. We see the wealth management space as the next big play from private equity and consolidators.

“Homecare services and nursing homes have seen high levels of activity, and this is likely to continue. Finally, there have been several high-profile Irish software deals in the last 12 months. We believe this will accelerate, as VC funds and PE start to realise some of their software investments. AI adoption will also drive funding rounds for both new companies and existing businesses that are investing in augmenting their current platforms.”

However, while the market is strong right now, there are signs of uncertainty ahead, particularly in regard to the Trump administration. “There is uncertainty around interest rate trajectories and what global policies will be implemented in response to the US, which will create uncertainty in the short to medium term,” Bowe said. “Lenders don’t like uncertainty. This may impact debt funding levels for acquisitions in certain sectors, which impacts valuations.

 “Mid-market deals are already taking longer to close, and there will now be further scrutiny by investors on what a Trump administration means for exporting into the US.

“But businesses servicing critical infrastructure and data centres, healthcare and also technology are more likely to weather any negative effects, and we expect M&A to remain strong here.  The renewables sector, whether that be commercial, residential or a utility level, should also remain resilient in Ireland, and Europe, despite negative moves in the US to stop the energy transition.”

Interest rates have fallen, which is positive from a financing point of view. “When interest rates are increased by central banks, borrowing costs increase, which makes financing transactions expensive. However, with plenty of capital available for M&A (both private equity and trade have been competitive), valuations have remained strong for quality businesses.”

Bowe remains buoyant about the financing arm of M&A activity. “With several active and willing lenders across Ireland at present, the outlook on M&A (from a financing transactions perspective) remains positive.

“We feel there are a few trends that will play out in funding transaction from debt lending perspective. These include an increased focus on a borrower’s exposure to anything relating to the US market and US economy, given Trump administration’s view on tariffs, and an  increased focus on a bank’s exposure on a sector level (i.e. if one lender overly to exposed to one specific sector).”

For companies looking to sell, it’s therefore crucial to find the right advice and partner with a company with experience in your sector and the M&A process. “At Forvis Mazars, we offer all the advisory services, global reach and expertise needed for a M&A process,” Bowe said. “We understand that M&A can be challenging and emotional for founder-led and family businesses. Most parties will only do it once, but for us it’s our day job, so bringing all our experience to bear is what we do. Our track record reflects our capabilities – after all, you’re only as good as your last deal! Early preparation and planning are crucial for achieving the best results and we are very focused on understand your business and what outcome you want from a M&A process. We want to be your M&A partner, someone you can lean on and deliver for you.”

Published in the Business Post on Friday, 14 February 2025.