2023 M&A Review

2023 was a year of resilience for the Irish M&A market. While global M&A volumes were down c. 23%, Irish M&A volumes performed resiliently, down only 9% YoY. This is a remarkably robust performance for Irish M&A, particularly in a global context, mirroring Irish macro outperformance.

Overview of transaction activity 

2021-2022 saw a sharp increase in M&A deal volumes in Ireland, following pent up Covid demand and represents a tough comparison period, but 2023 deal volumes remained steady vs. 2021-2022 levels and interestingly, significantly above pre-Covid levels (2018-2019), indicating a step change in the size of the Irish M&A market.

There was a total of 405 transactions in 2023, down 9.2% YoY and 95 transactions in Q4'23, down 13.6% YoY. Measuring against the pre-Covid period (2018-2019), 2023 transaction volumes were 38% above the pre Covid average of 294. On a quarterly basis, Q4’23 transaction volumes were 29.3% above the pre-Covid quarterly average of c.74 deals per quarter.

Additionally, 2023 deal volumes were only 3% below the average annual deal volume from 2021-2022 of 417 deals per annum (peak M&A period, reflecting pent up demand of 2020), highlighting the resilience of the Irish M&A environment in 2023.

Deal values were disclosed for 21% of transactions in Q4’23 / 12M’23, respectively representing €5.4bn / €33.3bn, with the merger of Smurfit Kappa and Westrock (€19bn) representing the largest deal in 2023 and CRH’s €1.9bn ($2.1bn) acquisition of the US construction aggregates supplier, Martin Marietta Materials being the largest deal for the quarter. Deal values in 2023 represented a 65.7% increase vs. 2022 and 146.1% vs. Q4’22.

Tech & Telecoms continued to be the most active sector in the Irish M&A market in 2023 (22% market share) – and indeed it has been the largest sector since 2013, a decade of dominance. The three largest deals in the Tech & Telecoms sector were all foreign acquisitions of home-grown Irish technology companies: €575m acquisition of Terry Clune’s Immedis by UKG (USA), Cubic Telecom’s €473m / 51% majority stake sale to Softbank and Taoglas’ €340m majority stake sale to US PE firm Graham Partners.

Domestic in-market Irish deals represented the largest share of transaction volumes by type in 2023 at 23% (31% in Q4’23). Notable deals during the year included Javah Energy Holdings €100m stake in Lumcloon Power and MHL Hotel Collection’s €50m acquisition of Brooks Hotel. Irish acquisitions of foreign companies were second in market share for 2023 at 22% (17% in Q4’23). UK remained the largest foreign acquiror of Irish assets by country with 14% share in 2023.

PE deal volumes represented c.15% share of transaction volumes in 2023, the highest share since 2019, with a slight uptick in the most recent quarter to c.17% market share, indicating increased sponsor activity as we go into 2024. Foreign financial buyers represented approximately c. 53% of total PE deals, with increasing interest in Irish assets ramping up as macro challenges bite in other markets.

Outlook 

As we enter 2024, we believe the Irish M&A market will move into growth mode, as the rate environment shifts to a pro-growth, rate cutting cycle, with ECB rates expected to fall to 2.6% by year end 2024 (from 4% currently). We therefore think that while 2023 was a year of resilience in the Irish M&A market, 2024 will be a year of growth. We expect rate cuts rather than rate volatility to dominate the agenda and spur transaction activity in Ireland.