M&A Outlook 2018 | KPMG | IE

M&A Outlook | More transactions expected in 2018

M&A Outlook 2018

KPMG published today the results of its annual M&A Outlook.

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Survey conducted with many of Ireland’s leading companies and M&A advisers

  • 57% of respondents expect deal volumes to be higher in 2018
  • Availability of capital cited as key driver of growth in activity
  • Private Equity set to play increased role in M&A activity
  • Deal failure largely due to avoidable reasons
  • Increase in respondents who expect Brexit to positively impact M&A levels in Ireland in 2018

24 January, 2018: KPMG today published the results of its annual M&A Outlook with a strong response from many of Ireland’s leading M&A executives and advisers. An increase in deal volumes reflects current relatively positive sentiment about the Irish economy, however Brexit related risks remain on the agenda. Meanwhile 55% of respondents cite ‘avoidable reasons’ for deal failure.

Key findings of the 2018 report are as follows:

Sentiment

  • 2018 M&A volumes will exceed last year with higher confidence levels (57% versus 36%)
  • A number of contributors noted some migration of capital out of the UK towards Ireland
  • Current market conditions and valuation are the primary shareholder considerations/drivers for disposals in 2018
  • Investor confidence remains a key factor in influencing deal activity in Ireland
  • Financial buyers are increasingly seen as a potential exit strategy reflecting private equity activity in the Irish market

Deal location

  • For the second consecutive year Ireland is considered as the most likely location of deal targets for Irish M&A executives, followed by the EU (excl. UK) with the UK in third place (down from No 2 in 2017)
  • Only a third (34%) of respondents now expect that M&A activity will be negatively impacted by Brexit – last year the figure was almost half of all respondents

 

Reasons for deal failure

  • 55% of respondents cite deal failure for avoidable reasons including unexpected diligence issues (26%), a lack of readiness (20%) and the quality of the deal team (9%)
  • Awareness of deal targets and vendor preparation would enable greater deal making in 2018

 

Commenting on the findings, Mark Collins, Partner and Head of Transaction Services at KPMG Ireland said: “The current environment continues to be favourable for deal making. This is underpinned by more robust corporate profits, access to capital and lower stock market volatility, all of which contribute to enhanced confidence levels”.

David O’Kelly, Partner at KPMG Ireland added: “There is a discernible increase in M&A activity forecast for 2018 reflecting the strong performance of Irish companies in a growing economy. A high degree of uncertainty remains around Brexit, however concerns amongst executives have lessened somewhat. While debt funding continues to be the preferred source of capital there is a definite uplift in Private Equity.”

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