Small businesses looking abroad for merger and acquisition opportunities

A SIGNIFICANT number of small to medium-sized privately-owned businesses here expect to be involved in merger and acquisition activity (M&A) over the next few years.

According to a new report into the attitudes and outlooks of Irish private companies, by IBI Corporate Finance, almost 30% of the sector here expects to see some M&A activity within the next three years.

Interestingly, the mindset of these companies — businesses that are family or otherwise privately-owned with an annual turnover of around €150 million — has changed in the last couple of years.

Where they previously looked at M&A prospects as a way of selling up the business, most are now looking at such activity from the viewpoint of potential buyers, and have the US and British markets in their sights.

According to IBI director, Ted Webb, privately-owned businesses here have become much more confident about their future prospects and have developed a “strong appetite for engaging in corporate deals in the years to come.”

“The last number of years have seen a huge increase in the volume and value of deals done amongst privately-owned companies in Ireland. The new survey clearly demonstrates that this level of activity will continue in the years ahead,” said Mr Webb.

The IBI survey — carried out in conjunction with Bank of Ireland Private Banking, the tax advisory company Kennelly & Twomey, A&L Goodbody and the independent M&A consultancy, Mergermarket — found that 71% expect to see their company valuations increase over the next 12 months, while over half of those surveyed said that their company’s performance had mirrored that of the Irish economy, over the past three years, with 16% saying their businesses’ growth had exceeded the national boom.

However, the survey also found that 77% of privately-owned companies — particularly family businesses — don’t have a definite succession plan for ownership of the business in place.