Q3 M&A Review 2023

While global mergers & acquisitions (M&A) volumes were at record low levels in Q3’23, representing the lowest deal count by volume, globally, in 11 years, the Irish M&A market bounced back into growth, up 5.5% YoY vs. c. 25%1 contraction globally. This is a remarkably robust performance in the face of an acute macro environment with twin pressures of a rapid rate hiking cycle and peak inflation creating a challenging M&A backdrop.

Overview of transaction activity 

There was a total of 116 transactions in Q3'23, up 5.5% YoY and 311 transactions YTD in the 9 months to September 2023, down 7%. 

It is important to contextualise deal volumes pre and post COVID, showing a clear step change in deal activity since COVID. Q3'23 transaction numbers were 58% above the pre COVID quarterly average of 74 deals per quarter (2018-2019) and also 17% above the COVID period average of 100 deals per quarter (Q3'20-Q4’22). 

Deal values were disclosed for 20% / 25% of the transactions in Q3’23 / 9M’23 respectively representing €22bn / €28bn, with the merger of Smurfit Kappa and Westrock (€19bn) representing the largest deal both in the quarter and YTD. This represents a 56% increase vs. 9M’22 and 24x vs. Q3’22. Tech & Telecoms remained the most active M&A sector in the 9M’23, representing 26% of total transaction volumes. 

The technology and telecoms sector has been the most active sector on an annual basis since 2013. In Q3’23. Technology and telecoms and industrial sectors had the joint largest share, each representing a c.16% share of total transaction volume for the period. 

Irish acquisitions of foreign companies represented the highest percentage of transaction volumes by type in 9M’23 at 24% (31% in Q3’23). Notable deals included Kingspan’s acquisition of Steico for €404m and Flutter’s acquisition of MaxBet for €141m. In-market Irish deals were a close second in market share for the 9M’23 at 23% (18% in Q3’23). PE deal volumes represented c. 15% share of transaction volumes in 9M’23, in line with 9M’22 (16%). Foreign financial buyers represented approximately c. 60% of total PE deals, with increasing interest in Irish assets ramping up as macro challenges bite in other markets. 

Outlook 

While the 2021-2022 period saw a step change in M&A deal volumes in Ireland, following pent up COVID demand, deal volumes have remained at an elevated level in 2023YTD vs. pre-COVID levels and as we enter into Q4, a traditionally strong volume quarter for Irish M&A, we expect the Irish M&A market to remain resilient. 

The rate outlook will be a key M&A driver, with rate stability crucial to encourage transactional activity. The M&A environment will, however, likely remain challenged, particularly in a higher (and more importantly, more volatile) for longer rate environment with persistent inflation, particularly in Europe (vs. US) implying peak rates are yet to come. An optimistic outlook would point however to the rate environment stabilising in 2024, encouraging an uptick in transactional activity as a new baseline level of macro stability is reached.