Turbulent times for dealmakers but reasons for cautious optimism

Katharine Byrne, Head of the BDO Corporate Finance team and a member of the BDO International M&A Group recently featured in The Irish Times Special Report on Mergers & Acquisitions.

Everything is relative. The year 2019 was regarded as a pretty good year for global merger and acquisition (M&A) activity with total transaction value reaching $3.7 trillion; 2022, on the other hand, was viewed as quite disappointing, with deal value of $3.6 trillion, ahead of 2020′s $3.4 trillion but a long way behind the quite remarkable $5.7 trillion notched up in 2021.

The merely ordinary pales in comparison with the extraordinary.

"That slowdown was the result of macroeconomic headwinds and geopolitical uncertainty stifling the dealmaking environment." - according to Katharine Byrne. “Supply-chain disruption, rising energy costs, inflation and higher borrowing costs, alongside lower levels of consumer confidence all contributed to volatility in the market,” she says. Katharine adds: "That this led to a shift in valuations across certain sectors as well as a pause in M&A strategy as businesses focused on conserving cash and protecting their core business.”

Katharine Byrne adds: “While 2022 did not achieve the same record-setting level of M&A activity as 2021 the volume of transactions completed in the Irish market was still higher than pre-Covid.”

“Despite all these headwinds optimism still persists for 2023 M&A activity,” she continues. “This is underpinned by the quantum of capital globally that needs to be deployed, combined with the attractiveness of Ireland – compared to the UK, in terms of our economic performance and access to the EU. Succession planning is very much front of mind for owner-managed businesses, where founders that survived the last recession are now emerging post-Covid with a clear objective of crystallising their equity value while also positioning the business for future growth. This is where we have seen an increase in ambitious management teams seeking to grow the business internationally who are seeking trade or equity partners that will enable them deliver on their expansion plans.”

Content adapted from The Irish Times.