MERGERS & ACQUISITIONS MAZARS
IRISH OUTLOOK for deal activity With the successful uptake of mergers and acquisitions in recent months, companies are now looking past organic growth and towards acquisitions and investments as a profitable means of business in Ireland, explains John Bowe, Managing Director at Mazars Corporate Finance Ireland.
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Growth by acquisition has its risks and it certainly isn’t inexpensive but with corporate balance sheets strong, growth through acquisition is on the agenda.
s a country, Ireland has strong fundamental qualities in terms of a growing economy, increased consumer confidence, a young educated workforce and an export orientated outlook. These qualities, which create an attractive environment for investment, indicate that the outlook for activity in Ireland will remain positive into 2017.
GROWTH BY ACQUISITION While companies can grow organically by winning new customers, adding new products or services, investing in new people and equipment and entering new markets, another way to grow is through acquisitions which, if executed correctly, can do all of the above but at a faster pace. Growth by acquisition has its risks and it certainly isn’t inexpensive but with corporate balance sheets strong, growth through acquisition is on the agenda. US corporates have always viewed Ireland as a place for investment with US investment representing over 75 per cent of all FDI into Ireland. In the mid-market space we have seen Irish companies such as Realex become acquired by Global Payments, Eirgen acquired by Opko and recently OSG was acquired by Sedgwick Claims Management Services. North American buyers are paying larger multiples, reflecting the strength of the dollar and also the availability of debt financing at cheaper interest rates than in the
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John Bowe, Managing Director, Mazars Corporate Finance Ireland
US. The IDA does an excellent job at attracting companies to Ireland with a positive onshore tax environment and holding company regimes.
PRIVATE EQUITY AS AN INVESTMENT Some recognisable Irish companies, such as Cartrawler, Hostelworld and Fintrax, have received private equity investments, allowing founder families to successfully exit the business. Although private equity investment for Irish companies is not new, today it is has a much more focussed and active investor base. Companies currently active in the Irish market include The Carlyle Cardinal Ireland Fund, Development Capital, MML, Broadlake, Renatus
and LionCourt, with even more companies taking private equity investment recently such as Carroll Meats, GSLS, Version 1 and Identigen. Private equity can be a good investment option for funding growth and allowing owners the opportunity to take some cash off the table. For those considering private equity, it is important to view it more as a partnership rather than just a cash investment. The added benefit is access to the private equity contacts, network, experience and portfolio companies that can really help your business grow. While private equity are not managers they will want a seat on the board, so it’s important to pick the right partner. The best way to find out how private equity firms operate is to speak with the companies in which they have already invested. The Irish outlook for M&A activity is positive. For companies looking at either funding growth or considering their strategy options, there are various funding options, private equity and trade companies looking to invest. Picking an adviser with international reach who can navigate the various options will add enormous value to your transaction. InBUSINESS | Q2 2016
19/07/2016 12:07