Strategic focus on value creation: M&A buyers prioritise immediate value and tighter deal discipline
With a strategic focus, value creation is designed into transactions from the outset rather than pursued after completion.
Against a backdrop of increased economic and geopolitical uncertainty and upward pressure on interest rates, buyers are increasingly interested in immediate gains as well as future growth projections. This is translating into longer and more disciplined deal processes.
“Buyers are approaching M&A with sharper focus, more rigorous due diligence and earlier integration planning,” says BDO’s head of deal advisory Katharine Byrne. “This often results in longer processes where commercial and operational due diligence teams are looking to engage with management teams earlier in the process to ensure the post-deal strategic plan is clearly mapped out and all parties are fully aligned.”
Deal structures are also becoming more flexible to bridge valuation gaps and manage risk, she adds. “But this needs to be carefully managed at outset by the advisors to ensure they are structured for tax and clearly understood and drafted to ensure no disputes arise on future earn-outs. The result is a more selective M&A environment in which value creation is designed into the transaction from the outset rather than pursued after completion.”
Synergies and long-term value creation have always been central to M&A activity, according to Focus Capital Partners managing director Eoin O’Keeffe, but buyers are now placing greater emphasis on resilience, stability and the quality of underlying earnings rather than solely pursuing large growth potential.
“As a result, we are seeing far more detailed diligence around customer portfolios as buyers are seeking to better understand the long-term dynamics of a business’s portfolio, and where they would likely see increased value or customer spend.”
“Buyers are less willing to rely on cheap debt, assumed multiple expansion or optimistic exit assumptions to drive returns,” adds PwC Ireland deals director Tom Noonan.
“Opportunistic, scale-for-scale’s-sake acquisitions are increasingly being replaced by deals grounded in strategic logic, earnings quality, operational value and sustainable long-term performance.”
It’s all about the here and now.
“Buyers want to get to the nub of the deal quite quickly,” observes EY corporate finance partner Ronan Murray. “They want to know quite early on where it’s going to land. They are paying for profitable companies with strong quality of earnings, not companies with optimistic growth projections.”
Cost is among the key drivers of the change. “The cost of capital has come down from its peak but remains meaningfully above where it was in the years leading up to 2022, and that makes the underlying return on any deal work harder,” says Fiachra Cork, partner in law firm William Fry’s corporate/M&A department.
“Buyers can no longer rely on cheap financing to make a marginal transaction stack up, which forces buyers to think harder about where the value will come from.”
Other factors are at play, of course.
“Heightened scrutiny is mainly due to macroeconomic influences like the Iran-US conflict, swift advancement of AI, and general market instability. As macro volatility rises, buyers require greater assurance about the business and careful analysis of all risk factors,” O’Keeffe points out.
The altered focus is also influencing activity in the market.
“Certain types of sector-led dealmaking have also tapered off,” Cork notes. “In particular, the TMT [telecoms, media, technology] sector, which had accounted for 56 per cent of Irish M&A deal value in 2024, fell to just 9 per cent in 2025. Technology remains the leading sector in global M&A by value, but in Ireland the willingness of buyers to pay transformational prices simply because an asset sits in a hot sector has faded.”
It is also affecting the shape and structure of deals. “We are continuing to see more creative solutions being used to bridge differences between buyer and seller value expectations,” says Colin Morgan, chief executive, Key Capital.
“This may include more structured or longer earnout periods and/or equity rollovers for sellers to ensure ‘skin in the game’ for a period post-acquisition.”
When structured appropriately, the seller can also benefit from these arrangements through potential future growth and upside in the business through earnout and equity rollover structures, he adds.
Fewer buyers are paying cash up front, Murray notes. “Deal structures reflect the level of uncertainty in the market. We are seeing more risk sharing through earnouts, deferrals and so on as well as more retention packages for key employees.”
Transactions are being structured and executed with greater discipline, says Noonan. “We are seeing increased use of tailored structuring solutions to bridge valuation gaps, alongside more conservative debt structures and deeper diligence from buyers and investment committees. For vendors, robust financial information, credible forecasts and a clear equity story are now critical to maintaining momentum and protecting value.”
It is also leading to longer processes, according to O’Keeffe. “Buyers are paying close attention to all aspects of diligence due to the current volatile macroeconomic climate, with commercial diligence becoming even more rigorous. International buyers are conducting longer, more focused diligence workstreams than in recent years, featuring detailed technology and customer diligence to gain confidence in the durability of the underlying customer base.”
This is contributing to longer and more structured deal processes, with transaction timelines in some cases extending from three months to six months, he adds.
Diligence has also broadened with buyers paying close attention to commercial and operational questions, not just legal and financial ones. “We are increasingly seeing sellers commission their own vendor due diligence reports ahead of going to market and present these to buyers as part of the sale process,” says Cork. “This allows sellers to anticipate buyer concerns early and gives buyers credible information from the outset.”
The value gained through increased discipline and more involved deal processes can be lost if post-deal integration isn’t handled properly, however.
“Longer-term, sustainable scale is not driven by volume alone, but by disciplined execution and well-planned integrations,” says Morgan. “This involves understanding the operational complexities of integration as part of the due diligence process and having open conversations about what this might look like post-completion.
“It is important to bear in mind that integration is never a one-size-fits-all approach; what worked for one business may not necessarily be applicable to another. Across our transaction experience, we have seen first-hand what drives a successful integration longer term and where value is most commonly lost.”
CONNECT WITH US TODAY
Be the first to know the latest news and updates
