Mergers and Acquisitions activity predicted to top 2015 levels

M&A activity predicted to top 2015 levels

The annual M&A Outlook report from KPMG indicates continued growth in mergers and acquisitions (M&A) activity for 2016.

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KPMG’s M&A Outlook 2016 reveals that Ireland’s leading Mergers and Acquisitions executives and advisors overwhelmingly expect deal activity this year will exceed the record levels of transactions in 2015.

Increased investor confidence and improved market conditions are seen as the key drivers of M&A growth over the next twelve months, along with greater access to funding on reasonable terms and favourable currency markets.

Among the key findings of the report are:

  • 2016 deal activity is predicted to top buoyant 2015 levels 
  • The Healthcare, Pharmaceuticals and Life Sciences sector is expected to see the most deal flow/value in 2016 
  • Ireland and the UK remain key geographical target markets for the Irish M&A community 
  • Enhanced price expectations is the factor considered most likely to inhibit deal activity in 2016
  • Debt funding is likely to be the primary source of funding for acquisitions in 2016
  • Ireland’s current tax system is considered to be supportive of M&A activity 

Commenting on the findings, Mark Collins, Partner and Head of Transaction Services at KPMG in Ireland said: “Despite some recent adverse global macroeconomic developments, the Irish M&A outlook remains largely positive, with substantial deal-making expected in 2016 across a range of sectors including Healthcare, Pharmaceutical and Life Sciences, Agribusiness and Food and Technology. The UK has overtaken Ireland as the territory that Irish respondents expect to see most deal flow and interestingly, mainland Europe and emerging markets are coming more into focus for larger organisations which highlights the desire to seek out new territories.”

The report cites ‘strategic fit’ as the top consideration in Irish boardrooms when identifying potential acquisition targets, indicating a stronger focus on long-term planning over short term fixes. Respondents pointed to expanding lines of business, increasing revenues/cutting costs and expanding geographical reach as the leading reasons for making acquisitions.

Michele Connolly, Corporate Finance Partner at KPMG in Ireland added: “The health of the Irish economy continues to be a barometer for M&A activity. Although there are concerns about the world economy, the report flags a return to confidence among Irish deal makers and the emergence of strong funding opportunities for existing and new sectors.

When it comes to funding for acquisitions, half of all respondents prefer debt funding ahead of cash reserves, private equity, IPO/equity markets and alternative investment sources. The preference towards debt funding is indicative of greater access to credit and increased willingness from financial institutions to partake in such transactions.”

ENDS

For more information, contact:
Paul Gray
Communications Manager, KPMG Ireland
paul.gray@kpmg.ie; (01)700 4728
 

Notes to the Editor

The KPMG M&A Outlook 2016 is based on research conducted in December 2015 amongst approximately 100 of Ireland’s leading M&A executives and advisors.
 

About KPMG in Ireland

KPMG in Ireland employs 2,200 people across its audit, tax and advisory services from offices in Dublin, Belfast, Cork and Galway. KPMG is a global network of professional firms providing Audit, Tax, and Advisory services.

About KPMG International

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 155 countries and have more than 162,000 people working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (‘KPMG International’), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such.
 

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