Ireland rides high on record global M&A surge

23 Jul 2021

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According to EY, there have been more deals involving Irish targets in the first six months of this year than in the whole of 2020.

As global mergers and acquisitions reached a record high, Ireland has made a strong comeback in M&A activity with almost 100 deals completed or announced in the first half of 2021.

Only 80 deals involving Irish targets were completed in 2020, for a total value of €11.5bn. The value of deals closed in H1 2021 was €17.5bn and a further €33.5bn are in the pipeline for completion.

“There has been a strong focus on the technology, pharma, care homes and real estate sectors,” said Grit Young, M&A partner at EY Ireland.

“We also saw some large financial services transactions of loan portfolios during the period. Given Ireland’s strengths in tech and pharma, the focus on those sectors was actually less pronounced than what we observed in the global markets.”

Ireland has also featured among the top countries for outbound M&A activity, meaning that many Irish companies have either purchased or merged with international companies.

Stream of activity in media, tech and renewables

M&A activity across the globe hit at an all-time high in H1 2021 with deals valued at more than $2.1trn, according to EY’s latest analysis.

This marks a $926bn increase on last year’s activity and is higher than the pre-pandemic five-year average of $1.6trn.

While tech is the clear frontrunner in the deals space with a 161pc increase in value on the pre-pandemic average, the media and entertainment sector has seen some of the year’s largest deals.

So far in 2021, media and entertainment saw $157bn in deals, which is 10 times the value of H1 2020 and twice as much as the pre-pandemic five-year average.

Andrea Guerzoni, EY’s global vice-chair for strategy and transactions, said that the media and entertainment sector is “on fire as businesses increasingly look for ways to combine and complement their strengths and position themselves in this new direct-to-consumer way of delivering content”.

Renewables have also picked up pace with activity increasing three-fold. The value transactions categorised as environmental, social and governance (ESG) has jumped from $35.7bn in H1 2020 to $96.5bn in the same period this year.

“ESG is increasingly becoming an integral part of investment decisions, with many CEOs and investors committing to adapt their current and future deal strategies with sustainability and long-term value creation at the forefront,” said Guerzoni.

The US has topped the list of countries with highest outbound M&A activity with a record $221bn in deals in H1. With Canada in second place, more than half of global activity was recorded in North America.

Asia-Pacific and Europe come in second and third respectively as regions with significant M&A activity this year. Europe recorded $412bn in activity, up from $245bn in H1 2020 and exceeding the pre-pandemic five-year H1 average of $356bn.

Guerzoni said that dealmakers are operating in a once-in-a-lifetime market post-pandemic.

“Having successfully navigated the challenge of transacting virtually, they find themselves in the sweet spot between optimism about economic prospects, progress in the vaccine roll-out in key economies, low-cost financing and record amounts of private capital dry powder.”

A recent EY Economic Eye report concluded that Ireland had recorded the highest growth of all major economies in the world in 2020. It forecasted that the Irish economy could grow by 5pc in 2021 and 4.6pc in 2022.

Vish Gain is a journalist and copywriter with Silicon Republic

editorial@siliconrepublic.com