Marked decline in merger and acquisition activity

The first quarter of 2013 saw a marked decline in Ireland-related merger and acquisition activity; with the volume of deals falling by over 54% and the value decreasing by 34.5%, compared with the same period last year.

However, according to Wendy Driver — business manager at information services provider Experian which has published the data — the Ireland-related figures are mirroring a wider trend being seen throughout Europe at present, and the first quarter is unlikely to be representative of the coming year as a whole.

“There was strong performance in the Republic’s burgeoning technology, software and pharmaceuticals sectors, which look likely to continue to provide the bulk of M&A activity as we move into the second quarter,” she noted.

Indeed, earlier this year, leading corporate law firm, William Fry suggested that 2013 should be a strong year for Ireland-related M&A activity; with a mix of technology-based deals and the sale of state assets set to drive growth.

Yesterday’s updated figures from Experian, however, note that only 40 transactions took place, involving Irish firms, during the first three months of this year. That total compared with 87 deals undertaken inside the first quarter of last year.

In addition, the combined value of first-quarter 2013 deals amounted to just over €4.85bn; down from €7.41bn for the corresponding period in 2012. The volume of activity in the ‘small deal’ and ‘mid-market deal’ categories were notable. Small deals — those with a value less than €12m — fell in number from 15 to seven, on a year-on-year basis, with their aggregate value declining by over 70% to €22m.

So-called mid-market deals — those with a transaction value of between €12m and €120m — fell in number from 12 to five, year-on-year, with their combined value also falling, this time, by 56.3%, to €202m. However, large deals — those worth over €120m in value — were largely in line with the first quarter data from 2012; with the volume of deals going from six to five and the value down from just under €6.9bn to €4.63bn.

In terms of sectoral activity, IT and pharmaceuticals were the most active; accounting for almost 20% of all transactions during the period. Unsurprisingly, Ireland’s contribution to European M&A activity also fell, amounting to just 1.9% of volume and 3.9% of total value.