M&A activity to remain strong during 2016 – Mazars
International interest in investing in Irish firms is expected to remain strong throughout 2016 according to leading accounting and advisory firm Mazars. Food, services, technology and manufacturing are the main target areas for foreign mergers and acquisitions (M&A) activity.
Mazars recently held an International Corporate Finance Conference in Dublin. The event brought together 40 senior corporate finance partners from 20 different countries to explore M&A opportunities globally and in Ireland. Guest speakers included senior executives from Actavo, DCC PLC, Glanbia PLC and UDG Healthcare PLC, who said that they will continue to grow through acquisition and are actively looking for opportunities.
In an Irish context, Mazars’ international partners reported:
- 65% of partners expect 2016 will be a stronger year for M&A activity than 2015
- 40% of their clients say Ireland is a postive location for investment, either through the acquisition of an existing Irish business or by setting up a presence here
- 24% have clients which have expressed an interest in Ireland in 2016. Sectors of interest include food, services, technology and manufacturing
Speakers also identified a number of key current international M&A trends, including:
- Cross-border M&A activity made up 53% of all deal value in Q1 2016 with the remainder being domestic-to-domestic transactions.
- Outlook for M&A activity internationally remains very positive in Europe, US, Asia and Middle East.
- Eurozone instablilty, Brexit and the slowdown in the Chinese economy are the main macro economic concerns for M&A dealmakers.
- M&A remains the preferred strategy for International growth for most corporates as opposed to organic growth.
- North American buyers of European assets are prepared to pay higher average multiples 10-12 times EBITDA compared with 7–8 times EBITDA from European buyers as a result of the continuing strong dollar.
- Corporates are outbidding PE in terms of multiples paid, reflecting synergy potential and lower leverage available for PE to fund transactions.
John Bowe, Managing Director, Mazars commented, “The global M+A market is very active and in Ireland we’ve already seen lots of M&A activity in the first 5 months of the year. In Q1 through the Mazars Corporate Finance network we transacted over 80 deals with a value of excess of $1 billion in 15 countries – including here in Ireland where we completed the sale of H2 Compliance to the German company Landbell. We delivered that transaction by leveraging Mazars’ global M&A expertise.”
“This global strength looks set to continue and Ireland is likely to benefit from this. There is lots of interest in Ireland and what is happening here. International and Irish firms with ambitious growth plans are looking to invest in Irish companies right now.”
“Actavo, DCC PLC, Glanbia PLC and UDG Healthcare PLC all told us that they are looking to continue to acquire companies themselves as part of their international growth strategy. They are especially interested in companies that have strong management teams, are export or growth oriented and have a good product or service. Sectors of interest include food, services, technology and manufacturing.”