Katharine Byrne, Partner and Head of Corporate Finance, and David O'Connor, Partner, Corporate Recovery, featured in the Sunday Business Post. For Katharine and David's commentary on how different businesses can find their routes to getting back on track, click here.
Leading the field in advising and funding Irish businesses, BDO has offices in Dublin, Limerick, and Cork as well as an affiliate office in Belfast. As a global organisation it is well placed to help Irish companies grow in both domestic and international markets.
Katharine Byrne, Partner and Head of BDO's Corporate Finance team, has specialised in corporate finance for the past 20 years and says this year has been one of the busiest in recent years.
“Certainly 2021 got off to a flying start with one of the busiest six months in several years,” she said. “While a lot of the activity can be attributed to the pent-up demand after the initial Covid slump, we are also seeing continued increase in M&A as record amounts of capital seek businesses to invest and grow."
“In looking at what is driving the overall value, we can clearly see some key trends, including increasing amounts of capital to deploy with institutional and long-term investors, globalisation of businesses driving cross-border M&A across many different sectors and also the fact that Irish share valuations are comparably lower than US stocks supporting growth of inbound M&A."
Katharine, who is a member of the BDO International M&A Group, says the overall increase in M&A activity and deal value is evidenced across a number of sectors.
“The tech sector continues to remain the most active with approximately one in four transactions, followed by Business Services covering a very broad range of deal size,” she said. “This is a particularly active sector for private equity buyers with a lot of consolidation opportunities at the lower end of the mid-market. The financial services sector has also been hot for consolidation, particularly the sub-sectors of insurance and wealth management with increasing valuations as PE-backed groups look for bolt-on acquisitions. Healthcare, education and renewable energy also continue to attract a lot of international capital with some significant transactions completed in last few months.
“Outside the ‘hot’ sectors, we continue to see a strong appetite for M&A across most sectors as companies look to target businesses with niche market positions, strong management teams and good potential for further growth.”
David O’Connor, Partner, BDO Corporate Advisory group specialising in advisory, restructuring and insolvency, agrees that the past year has been difficult for businesses across every sector, but says now is the time to make changes.
“It is fair to say that Covid has created a significant challenge for Irish companies,” he said.
“When you look at the number of corporate insolvencies which have occurred since the start of the pandemic and compare these to pre-Covid, the numbers have remained relatively static and, in some sectors, numbers have even fallen. It is, however, generally accepted that the true level of distress for Irish
businesses is being masked by the various government supports which continue to be made available."
“But as Ireland comes out of lockdown, hopefully for the last time, it is an opportune time for business owners and directors to take stock and re-evaluate their business. Companies need to be prepared for when these government support mechanisms are phased out – and to give themselves the maximum number of options, management needs to act quickly and take early actions as adopting a wait-and-see strategy is unlikely to result in a successful outcome.”
David, whose advisory work includes company turnarounds, business reviews, financial monitoring, and restructuring & financing assignments, says most businesses, even the successful ones, will face challenges throughout their lifecycle and for any restructuring option to work, management needs to act quickly and decisively.
“From early analysis to strategic engagement with critical stakeholders, much can be done to safeguard
enterprise, which will hopefully give management several options and guide them to the restructuring option, which will benefit their business – be that consensual or non-consensual,” he said.
“And you have a better chance of success if there is proper engagement with all stakeholders. People
sometimes think that the stakeholders are the owners of the business; however, when it comes to
restructuring, the term stakeholder covers all parties who are likely to be negatively impacted if the restructuring process fails.”
David O’Connor and his colleagues can help companies to find the best route out of difficult situations they may currently find themselves in – with communication being key, no matter what the situation.
And as we continue to move out of lockdown and towards a brighter future, Katharine Byrne says it is also essential for management teams to be aware of all the funding options now available.
“It is important to ensure that they assess and understand what each funding partner is offering before they agree on terms.”
Content adapted from the Sunday Business Post.