Is M&A the key to innovation and sustainability for Irish CEOs

In Ireland, the M&A landscape is particularly vibrant, with CEOs and investors showing a keen interest in a variety of transaction opportunities, from trade sales to private equity investment to strategic alliances. Ireland's thriving tech sector and business-friendly climate has fuelled a boom in deal-making, outpacing the UK and EU areas, which is likely to continue, as companies pursue innovative technologies and seek to capitalise on the entrepreneurial energy of startups which have scaled. The strategic imperatives for Irish M&A are expected to align with global patterns, emphasising the acquisition of larger market shares, expansion into new markets, and the integration of advanced technology into existing operations. This is especially pertinent for Ireland, given its status as a European tech hub.

With 40% of CEOs stating that their primary objective for pursuing acquisitions is to acquire technology, new product capabilities and innovative startups will enable them to stay ahead of competitors. Buyers need to be laser-focussed on their approach to financial, legal, and commercial M&A due diligence to ensure that identified targets will actually help those acquirers achieve their strategic ambitions, particularly in a rapidly changing technological environment. In such a landscape, CEOs may be reluctant to risk everything on a single deal to acquire technology and so creative variations to traditional M&A structures may need to be considered to offer increased flexibility and risk-sharing as a means to address those technology uncertainties.

With global funding markets more receptive in 2024, Irish acquirers may find it easier to secure financing for deals and may be the targets of larger companies seeking to expand their geographic footprint or product offering. However, they must remain cautious of potential market tightening as political events unfold. For those looking to divest, the market's increasing appetite for acquisitions and the continued resurgence of private equity could provide favourable conditions. Nonetheless, the timing of PE's full-fledged return to the M&A space remains a little uncertain for large transactions as they await potential interest rate decreases particularly in Eurozone and the UK. Irish companies must stay attuned to shifts in monetary policy that could influence the M&A landscape.

To provide corporate sellers with more control over M&A transactions, particularly as a counter-measure to lengthy deal timelines that have become a feature of the M&A market in the last few years, time is well spent by those sellers preparing potential divestment assets for sale, including anticipating issues of particular relevance to likely buyers of those assets and identifying potential regulatory approval requirements that may add to longer deal timelines. Sell-side due diligence of prospective buyers can also be warranted to help flush out any potential roadblocks or delays that may arise from ever-increasing competition law, foreign direct investment and foreign state aid regime requirements.