‘Scale, sector resilience, growth’: The crucial factors for private equity investors
Given the change in macro conditions, there is a hyper focus now on fund managers and companies where operational value can be additive.
Private equity investment rose substantially in Ireland last year and experts in the field expect a solid 2025 as well, but macro factors could impact that. The breadth of opportunity appears to be the key driver of confidence, yet the variety of potential wider world impacts have also tempered it.
“Across Ireland, we are seeing the most opportunity across several key growth sectors, notably technology, business and professional services, and healthcare,” says Stephen Kane, head of corporate advisory, investment banking, at Goodbody.
“Technology, driven by artificial intelligence, continues to thrive while engineering, construction, professional services, and medical devices offer attractive fundamentals in a growing economy.”
There are many aspects influencing decisions around private equity (PE) investments, but the fundamental goal remains the same, to find investments with a clear benefit.
“Given the change in macro conditions, there is a hyper focus now on fund managers and companies where operational value can be additive,” says Karl Rogers, managing director and chief investment officer at Elkstone.
The potential for the entity receiving investment to grow with the aid of private equity tends to drive investment decisions.
“There are many factors that investors look for, but scale, sector resilience and growth are crucial. Investors typically seek businesses that demonstrate strong prospects for expansion, whether through organic growth, market leadership, or the opportunity for strategic acquisition,” says Dominic Conlon, corporate partner at Ogier.
“Sector resilience is an increasingly critical consideration, especially considering recent economic volatility and global challenges. Sectors that have demonstrated durability, such as technology, life sciences, healthcare, and certain real estate segments, tend to attract heightened interest. PE investors will look at the overall competitive advantage of the company – and the management team – when making their assessment.”
The benefits of private equity investment for firms are obvious, as the cash injection tends to also come with added expertise.
“Irish firms considering PE investment may benefit from several advantages. Among these is access to capital, which can drive expansion, fund technology upgrades, and enable entry into new markets or practice areas,” says Edon Byrnes, corporate partner at Ogier.
“A number of the PE firms would have considerable sectoral experience and network connections in the UK and Ireland which can be availed of to further accelerate growth. The investment amount may be similar between different PE firms, but their experience and approach can greatly impact the success and future growth of the company.”
Rogers says that Irish companies need to be realistic when thinking about why they are bringing private equity on board.
“When private equity is spoken about, it is usually referring to buyout. This means that the founders will not be the majority shareholders any more. The ultimate decision-making lies with the buyout firm,” he says.
“The advantage is a release of liquidity for the founders and having a large value-add platform behind you to bring the company to the next level. The negative is that it’s a different structural set-up and incentivisation plan versus previously.”
The package that private equity offers founders is obviously appealing. Many founders tend to have most of their personal wealth tied up in their company. This kind of investment enables them to realise some value for what they have built while also getting the capital needed to expand further.
“It can be the best of both worlds with the ability to partially de-risk. An owner will be able to retain some ownership while receiving external capital for expansion,” says Barry Madden, managing director of Focus Capital Partners.
“A good PE house will bring professionalism and strategic expertise that helps bring the business to the next level. This means that it helps create value for a further future sale. Challenges, however, include that you will no longer have complete control of how you run your business.”
That last aspect is one Madden says is of vital importance for any business taking on private equity investment.
“It’s imperative that you partner with the right PE, who is aligned with your future vision as to how to grow the business. It’s highly important that there is a personality fit also and that they are people you can work with,” he says.
“If something goes wrong, you want to be comfortable that everyone is in it together to work through any issues. An experienced corporate finance adviser plays a crucial role in connecting you with a private equity partner whose goals align with your investment strategy.”
There is a mixed view on where exactly the private equity market will go this year. Global factors are playing a key role in tempering expectations.
“In 2024 private equity accounted for approximately 28 per cent of global M&A transactions by deal count and 42 per cent of total transaction value,” says Kane. “The first half of 2025 has seen significant global volatility across debt, equity, and M&A markets as the result of the changing US tariff policy and geopolitical conflicts.
“As a result, the first half of 2025 was slightly lower than 2024 from both a transaction volume and a transaction value perspective. Pipelines are strong across the market, and a number of funds continue to have significant dry powder, as a result we expect a stronger second half of 2025 with increased deal activity.”
Rogers holds a similar view with Ireland’s relatively immature private equity ecosystem meriting particular attention.
“Ireland is a less mature PE ecosystem, which consists of smaller funds,” he says. “This along, with uncertainty around tariffs is leading to more difficult fundraising environments for smaller PE funds. The availability of capital over the coming years due to the difficult fundraising environment is worth keeping an eye on.”
