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M&A Market

Richard Martin Richard Martin

With continued uncertainty in the local economy, particularly in relation to Brexit, you could be forgiven for expecting M&A transaction volumes in Northern Ireland to be significantly lower than recent years.  However, despite some companies and entrepreneurs adopting a ‘wait and see’ approach, there are numerous local businesses pressing ahead with ambitious growth plans, attempting to jump ahead of their competitors.

This is reflected in the deal statistics for Northern Ireland for the first quarter of 2019, which noted almost identical deal volumes to the same period in 2018, with an expectation of additional deal notifications to follow.  This goes against the UK national trend, where volumes were down around a fifth compared with last year.

The deal volume in Northern Ireland (51 transactions) suggests that annual transaction volume could well top the 200 mark for the third successive year, albeit that a no deal / hard Brexit would be expected to curb deal activity, should it occur.

In terms of deal value, 2018 was a record year in Northern Ireland, with a total value of approximately £2.2 billion, up 28% on the previous year.  Total deal value was driven by a number of particularly large transactions, including the £455 million acquisition of Lagan Group by Breedon Group plc.  2019 has a long way to go to reach those heights, with higher value deals so far being few and far between.

Part of the resilience of the Northern Irish deal market can be attributed to the robust funding environment.  In recent years there has been a significant increase in the number of alternative funders, providing competition to traditional funding sources and allowing businesses to secure a product that is suited to their needs, and at competitive rates. 

According to Experian, Grant Thornton was the most prolific dealmaker locally in 2018.  In recent years, we have been running funding advisory workshops in conjunction with Intertrade Ireland across Ireland, with the focus on exploring the plethora of funding options available, and demystifying some of the myths surrounding alternative lenders.

Despite the rise of ‘alternative’ funding options in the Northern Ireland market, it is still a concept less well developed here than elsewhere.  In the US, for example, what we might consider ‘traditional’ bank financing accounts for less than 30% of overall funding. Locally, many businesses still look towards their incumbent bank as the sole source of funding, albeit that evidence suggests that the local market is becoming more aware of the alternative products available to them.

Building relationships with a number of potential funders may be critical to seizing opportunities as they arise – approaching your financing requirements with an open mind is likely to achieve best results