M&A Deals increase 14% in 2020 to ?9.1bn
Total inbound volume reached a new record of 121 deals worth ?8.8bn
A total value of ?9.1bn was recorded in Irish M&A in 2020, a 14% increase on 2019, and deal volume remained consistent at 169 deals for the year, displaying remarkable strength despite a turbulent year. In particular, the final quarter of the year registered ?5.3bn in activity, more than the previous three quarters combined. This is according to the William Fry M&A Review 2020, in association with Mergermarket, which was published today.
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Key Findings for 2020 include:
- Total inbound volume reached a new record of 121 deals worth ?8.8bn
- Deal value rose 14% to ?9.1bn despite caution around the COVID-19 pandemic
- Q4 registered ?5.3bn in activity, more than Q1-Q3 combined
- Private Equity activity jumped significantly by value and volume with 56 deals worth ?5.2bn
- There were 11 deals worth ?250m or more, compared to only 4 deals in 2019 and 2018
- A total of 60 mid-market deals (?5m-?250m) were announced in 2020 (85% of total deals)
- The technology, media, and telecoms (TMT) sector accounted for 25% of total volume across several key sectors
Stephen Keogh, Head of Corporate/ M&A at William Fry, noted: "Despite the volatile economic climate in 2020, the Irish M&A market's performance was very strong, matching 2019 deal activity by volume and exceeding it by value by 14%. These figures are even more impressive when you compare them internationally. In contrast to Ireland, overall European deal volume fell 17% over the same period, and value ticked up by a modest 3% to ?739.4bn."
The mid-market continues successfully to fuel the Irish M&A market. A total of 60 mid-market deals (?5m-?250m) were announced in 2020 which, despite registering a 9% drop in volume compared to the previous year, still accounted for an impressive 85% of deals with a disclosed deal value.
The upper end of the market was a highlight of Irish M&A in 2020. A total of 11 deals worth ?250m or more were announced in 2020, worth a combined value of ?6.3bn. By comparison, only four deals within this price bracket were announced in both 2018 and 2019. Much of the activity at the top end of the market took place in the second half of 2020, after dealmakers had had a chance to come to terms with the effects of the COVID-19 pandemic and price in its effects. The top five deals of the year were all announced in H2.
The technology, media, and telecoms (TMT) sector continued to attract the lion's share of Irish M&A in 2020, both in terms of volume and value accounting for 25% of total volume and 22% of value, while attracting three of the top ten deals of the year. The largest TMT deal of the year was CK Hutchison's ?600m proposed sale of mobile operator Three Ireland to telco infrastructure firm Cellnex. Activity within the health and life sciences sector also resulted in a series of high-profile deals in 2020. A total of ?1.3bn-worth of deals were announced within the sector - more than seven times the total in 2019. The largest transaction of the sector in 2020 was Swiss pharma firm Roche's ?380m well-pulicised acquisition of biotech startup Inflazome. The spotlight has been turned on the sector following the outbreak of COVID-19, as companies urgently look to develop efficient testing and effective treatments for the virus.
All the top 20 deals of the year were inbound cross border transactions. Overall, there were 121 inbound transactions worth ?8.8bn announced across the year, a 6% rise in volume and a 16% rise in value on the previous year. UK and US-based buyers were most active in the Irish M&A market, carrying out 47 and 38 deals in the first ten months of the year, respectively. Both countries recorded an uptick in activity compared to 2019, despite the challenges faced amidst the COVID-19 pandemic. US-based buyers were responsible for ?3.7bn of total value in 2020, the highest of any inbound country.
Andrew McIntyre, Head of Inward Investment/FDI at William Fry, said: "As an economy largely reliant on overseas investment, Ireland has been particularly vulnerable to the economic impact of the COVID-19 outbreak. However, Ireland's TMT and business services sectors continue to attract international attention and last month IDA Ireland reported continued investment in 2020 with 246 new investments and a net increase of almost 9,000 jobs."
Increased private equity activity in the Irish market was a notable trend in 2020. While total M&A activity remained consistent year on year, private equity firms continued to ramp up their presence in the Irish market. A total of 56 PE transactions were announced in 2020, 47% more than in 2019, while value rose 105% to ?5.2bn. Thirteen of the top twenty deals of the year had PE involvement - an impressive performance given the challenges dealmakers faced in 2020. Ireland's PE activity outperformed that of Europe, which fell by 10% in volume terms to 1,973 deals, while value rose by a more modest 26% to ?298.8bn.
Outlook for 2021
Looking ahead to 2021, Stephen Keogh concluded by saying: "As dealmakers plan for 2021, there are signs that the era of extreme uncertainty is drawing to a much needed close. Several positive indicators are behind this renewed sense of optimism: the commencement of vaccine rollouts was a crucial achievement in the long battle against the virus, and Joe Biden's US electoral victory is expected to bring greater stability to global markets. Moreover, the long-awaited agreement on the terms of the UK's exit from the EU (limited though they are) is sure to bring a renewed sense of certainty. All in all, it seems like there are solid grounds for optimism as we survey the Irish M&A market in 2021."
"Despite certain challenges on the horizon, there is every reason to believe that 2021 will be a year of regained certainty, particularly in the second half of the year. The gradual global economic recovery from the COVID-19 crisis, coupled with greater geopolitical stability in the form of the UK-EU trade deal, will provide the backdrop for a more confident Irish M&A market in 2021."
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