Mergers and acquisitions (M&A) volume in Ireland through the first six months of 2020 fell by 29% year-on-year, according to research published by William Fry. However, the drop in M&A is not as severe as the global decline, prompting cautious optimism that activity may rise in the second half of 2020.

The mid-year William Fry Mergers & Acquisitions Review 2020, which is published in association with Mergermarket, was released today. It reports that M&A in H1 2020 amounted to €2bn invested across 65 deals, representing falls of 26% in value and 29% in volume.

Among the key findings of the report:

• Deal volume fell from 75 to 65 deals in H1 2020
• Deal value decreased to €2bn from €2.5bn
• 89% of deals were mid-market (€5m-€250m)
• Inbound M&A value accounted for 95% of the total sum invested
• There were 27 private equity transactions, the highest half-yearly volume of the past seven years
• Technology, media and telecom (TMT) accounted for 54% of value and 34% of volume.

Stephen Keogh (pictured), head of corporate and M&A in William Fry, said that for most markets 2020 is likely to represent one of the lowest, if not the lowest, watermarks in M&A since the global financial crisis more than a decade ago.

“A significant decline in Irish M&A activity was to be expected, yet these falls are far less than the global decline in M&A, where deal value sunk by 53% over the same period, and volume dropped 49%, as investors worldwide adopted a highly risk-averse mindset,” Keogh added.

In Association with

In the mid-market sector, in contrast to most previous years, there were no large deals worth €500m or more. The largest deal of the period was the sale of Dublin semiconductor innovator Decawave to US-based Qorvo (advised by William Fry) for a reported €363m, while the next largest was telco eircom’s €300m sale of tower assets, Emerald Tower, to Blackstone Group's telecom infrastructure owner Phoenix Tower.

The M&A report also noted that inbound activity held up relatively robustly, in spite of the global quarantine period, with inbound deal volume falling by only 10% on H1 2019, whereas domestic volume fell by 59%.

Private equity also featured heavily in Ireland’s M&A market in H1, with the report stating that financial sponsor activity held up incredibly well. The largest M&A deal to date in 2020 – the Qorvo/Decawave deal – represented an exit for a number of VC funds including Atlantic Bridge, Act Venture Capital, Enterprise Ireland and Kernel Capital.

The pharmaceuticals, medical and biotech sector was the second-largest sector in H1 after TMT and recorded deal value of €613m, or 31% of total M&A value. Much of this was due to US-based private equity firm Blackstone’s €299m acquisition of Medtronic MiniMed, a manufacturer of diabetes management equipment, from medical technology firm Medtronic.

The M&A report points to the renewables sector as an area to watch over the next 12 to 24 months. It suggests that the €35m sale of a wind farm in Letteragh to Greencoat Renewable – the largest domestic deal of the year so far across all sectors – could be a sign of what's to come.

According to Keogh, with the Green Party now in government and Ireland's Environmental Protection Agency recently launching a €600,000 fund for Irish innovators to develop business-ready solutions for the circular economy, further renewable energy deals and transactions with a green flavour more generally may follow.

Keogh added that there was reason to be cautiously optimistic for an uptick in M&A activity during the latter half of 2020. “The buoyancy of the M&A market will hang on the recovery of the global economy, and on the government and health system's ability to manage any potential local flare-ups of coronavirus.

“However, Ireland's fundamentals, its historically strong economic growth combined with its technology and pharma expertise, are likely to remain a draw for investors not in spite of, but because of, the challenges of this particular economic and health crisis.”