M&A activity in the first half of 2022 has remained buoyant, according to Renatus, which tracks Mergers & Acquisitions activity in its weekly newsletter.
Conor Hall, private equity associate at Renatus, said there were 226 deals completed in H1 2022 compared with 200 in H1 2021.
“The question now is whether this level of activity can be sustained or whether it will succumb to the effects of macro headwinds,” Hall added.
The primary category of acquirers in H1 2022 were foreign businesses. Hall identified four factors which may have enhanced the attractiveness of Irish businesses to foreign buyers.
• Brexit: Post-Brexit, Ireland has become an attractive base for companies looking to maintain an EU connection.
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• Multinational Presence: Ireland has a strong SME sector, and a portion of these SMEs thrive in the ecosystem of larger multinational businesses. Irish SMEs that trade with these international businesses have a blue-chip customer group which is attractive to potential acquirers.
• Foreign Private Equity: There has been a recent influx of UK and European-based private equity entering the Irish market. One H1 example was Exponent’s investment in H&MV Engineering.
• European Consolidation: The Irish market has become a target in European-wide consolidation plays. “We have seen this in the nursing home sector, with the likes of Belgian-based Aedifica being highly acquisitive in recent years,” Hall explained. “We have also seen it in the veterinary sector in the past six months, with Mars-owned Linneaus acquiring Village Vets, among others.”
Looking at M&A based on the sector of the acquired company, financial services and software were the two most active distinct sectors in H1 2022. Notable deals in the first half of 2022 included:
• Insurance broker Innovu, which had previously acquired a number of Irish brokers in a private equity-backed roll-up play, was acquired by an American broker, Gallagher. This marked another significant exit by an Irish-based consolidator following Arachas which was sold in 2020 for an estimated €250m to Ardonagh Group, a UK peer.
• Waystone Compliance Solutions acquired two Irish businesses, KB Associates and Centaur Fund Services in the compliance management space.
There were also some landmark deals during the first half of 2022 for Irish businesses, two of which stood out in particular.
JP Morgan acquired Cork-based Global Shares for a reported $730m, one of the largest fintech exits in Irish history.
“It is also a great case study of how a supportive private equity partner can bring more than cash to the table and accelerate a business’ expansion,” said Hall.
“Motive Partners’ backing of Global Shares was described as a seminal moment in its journey by one of its early backers.”
The eShopWorld acquisition of Scalefast for a reported $300m in May is another notable deal, according to Hall.
“ESW became a unicorn itself when it was sold to Asendia in 2021. The Scalefast deal is a great marker that the Irish-based business shows no signs of slowing down on its trajectory toward solidifying itself as a global leader in e-commerce space.
“ESW has been on a phenomenal growth trajectory over the last couple of years with revenue growing from c. €211m in FY16 to c. €844m in FY20.”
There were no Irish IPOs in the first six months of 2022 compared to three in the first half of 2021. “This may be as a consequence of the volatility that has been witnessed in global equity markets,” said Hall.
