Katherine Byrne, Head of Corporate Finance and Kevin Doyle, Tax Partner, International Tax featured in The Irish Times Business Ireland magazine to discuss why international investors are attached to Ireland.
Ireland attracted unprecedented attention from overseas investors last year, keen to root out overachieving but undervalued businesses. Good cash flow businesses across the spectrum, from manufacturing and engineering to financial services, healthcare and tech, are in demand.
The global outlook of Irish businesses is attractive to international investors, points out Katharine. So too is the fact that Irish businesses typically stand at the lower end of the valuation spectrum, offering good potential for return on investment.
More than 70% of transactions which took place here last year were inbound, she adds, up one third on the previous year.
“We are seeing specialist private equity funds coming in who are very focused on sub-sectors,” she says. “Ireland, along with places like Israel and Germany, is a hub of activity in the early-stage space.”
Brexit has been an accelerant. “We’ve seen a lot of Brexit bounce, where organisations moving goods around need an Irish or a European entity,” adds Kevin.
Interest rates may be set to rise but neither is unduly worried about the impact that will have on deal flow.
“It might change valuation perspectives but the issue we see is that there are not enough opportunities being brought to them,” Katherine notes, who says it’s something she hears repeatedly from PE firms.
The flow of investment in the last 12 months has been substantial and many of the decisions which were made by overseas investors to set up and grow here were done so in full knowledge that Ireland would likely sign up to the global OECD pact.
Indeed, the way the Government negotiated has turned out to be “the best way we could have come on board”, reckons Kevin. The €750 million turnover threshold plays to Ireland’s strengths.
“Historically where Ireland has done really well at attracting FDI is at the headcount of up to 30, which then mushrooms up to 100. A lot of those will be below the threshold and so pay 12.5% . There are still lots of them in that small to medium and medium to large category,” says Kevin.
Over the threshold the consistency that now exists means Ireland will take an increased tax on operators over the threshold – a bonus.
Content adapted from The Irish Times.
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