Firstly, it’s important to have considered your own tax planning and knowing what tax reliefs are available. Engage with a competent personal tax adviser and wealth adviser to ensure holistic advice tailored to your individual circumstances.
Ireland’s M&A market has remained resilient despite geopolitical tension, economic uncertainty and elevated borrowing costs. But while deal volumes have held up, the complexity of transactions has increased significantly. From personal tax planning and exit structuring to artificial intelligence (AI) readiness, ESG scrutiny and funding mix, preparation matters and expert advice is critical.
Successful transactions begin long before a sale process formally starts. Personal financial planning is often left too late.
Eimear highlights the following:
Knowing what you want to do post-deal is important too; is there personal debt to clear, college fees? What capital do they need to sustain their desired lifestyle or retirement etc, or will it be reinvested or banked? Your financial goals may influence whether you seek a full or partial exit.
Exit planning should begin as early as possible, regardless of immediate intent to sell. You never know when an offer that you can’t refuse is presented and it creates options.
In BDO deal advisory, we model out various scenarios depending on deal structures (eg upfront cash vs earn outs) as offers are not just about the upfront multiple. It is important to understand the risk and reward under different deal structures.
If they have founded the business, knowing the loyal staff are retained and fairly rewarded is a key indicator for success… ensuring a sense of legacy and satisfaction beyond financial gain.
Underperforming deals are often a result of incomplete or superficial due diligence across the financial, commercial, legal, operational, technology areas. Investing in a structured, multidisciplinary diligence process will significantly reduce risk and increase the likelihood of transaction success.
Risk, diligence and value creation
As buyers grow more selective, the scope of due diligence has expanded well beyond financials. Rory states underperformance is often rooted in gaps that could have been identified earlier.
That process now extends into technology, culture and ESG – and in the current environment, the risks are often underestimated rather than unknown.
Acquirers can overlook risks requiring deeper financial analysis, such as hidden liabilities, revenue quality, customer concentration, and working capital traps, beyond that, cybersecurity vulnerabilities, cultural misalignment, ESG exposures, and integration complexity” can materially affect value. Preparation is not just about identifying risk but managing integration from day one. Engaging finance, operations, IT, HR, legal and ESG leaders at the outset “uncovers integration challenges early, validates value drivers, and accelerates synergy realisation.
Buyers are now trying to factor this risk into valuations and due diligence instead of delaying transactions. Due diligence is no longer focused solely on the historic trading performance but is targeted towards understanding the relevant market dynamics in which a company operates, with particular focus on key risks to supply chain and potential regulatory changes.
Risk, AI and ESG: reshaping valuations
Katharine, notes that while global volatility has changed buyer behaviour, it has not halted activity. Instead, buyers are adjusting their approach.
AI is now a practical part of M&A, not just a story. Buyers assess how AI can improve efficiency, reduce costs, and create value… it’s imperative for management teams to consider the impact of AI on their business and not to ignore it.
Majority of debt and equity providers have clear ESG reporting requirements. ESG is also embedded in supply chain checks, governance reviews, and long-term value planning. So while ESG may not always be called out within valuation negotiations, companies with solid transition plans and strong ESG data attract more interest and face fewer diligence issues.
Finance for funding M&A usually comes from a combination of debt and equity sources. The good news is there are more funding options available than any time in the recent past ranging from traditional bank funding, alternative debt providers and private equity players.
Funding: more choice, more discipline
Richard highlights the breadth of financing now available.
There are a number of factors that need to be considered when assessing the optimal funding structure: (i) sustainable level of cashflows in the combined businesses, (ii) upfront costs associated with the integration of the target… (iii) working capital and capex requirements, (iv) level of security available for funders, and (v) target return on equity.
Dealmakers are adapting by reducing leverage, increasing equity contributions, and using deferred/contingent payments to bridge valuation gaps.
The decision to bring in equity is usually determined by three factors: growth potential of the company, capability of management team to deliver on that growth, and the existing shareholders’ plan to crystallise value. Cultural fit is also really important to consider at outset.
It is critical you do your homework before you buy, not rush the due diligence process and ensure you have sufficient coverage and knowledge of the business before you close. To avoid these pitfalls its critical you get an experienced advisor onboard.