Publication

Global M&A snapshot: Transaction momentum building

Michael Neary Michael Neary

Irish companies are actively pursuing M&A opportunities as a catalyst for growth and to expand into new markets but are risk averse to fund growth via external sources.

The findings of the Grant Thornton International Business Report shine a light on the current mind-set of Irish businesses and their outlook for the short to medium term. Firstly, it shows that Irish companies are actively pursuing M&A opportunities as a catalyst for growth and to expand into new markets. Secondly, the report illustrates that the majority of Irish businesses are risk averse to fund growth via external sources.

The attitude to M&A emanating from the survey is consistent with the current surge in both the volume and value of deals in the market place. In fact, the value of deals for 2014 was the highest since 2000 and the volume of deals also surpassed pre-recession levels.

Furthermore, the current wave of deal activity does not show any signs of abating – a favourable macroeconomic environment, low interest rates and a proliferation of financing options are allowing businesses to pursue acquisitions as part of their growth strategy.

Despite the favourable economic winds, Irish businesses are reluctant to fund growth via external means. The recession has clearly left an impact on businesses’ attitude to external financing. The obvious merit in this conservative approach is that businesses will not increase leverage and therefore eliminate the risks associated with such a strategy. On the contrary, a reluctance to utilise external finance to spur growth may be hindering the true potential of Irish businesses in the renewed growth environment.

For businesses that are looking outside of their own resources to fund growth, there have been a number of positive developments in the Irish financing landscape in the recent past, both bank and non-bank. In addition, there is range of private equity players, including the state-backed Irish Strategic Investment Fund, active in the SME market space. Overall, this means that for 2015 and beyond, Irish companies have genuine options to help fund their growth plans.

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