Earlier this year we published the William Fry M&A Review 2011. Our review found that M&A activity in 2011 increased by 44% in value (from €9.9 billion to €14.3 billion), and 5% in volume (from 76 to 80 deals) compared to 2010. This boost in M&A activity builds on the increase shown in 2010 from 2009 and is likely to continue through 2012. Bryan Bourke, Partner and head of Corporate and M&A at William Fry says that 2011’s figures build on a good performance in 2010 and show steady recovery since a low in 2009: “Provided we can work through the eurozone crisis, this year should continue the positive trend in terms of overall activity, driven by the disposal of non-core bank assets and also strong performances in the pharma and TMT sectors.”
Some key findings of our M&A Review were:
Disposal of Financial Services Assets Opportune for M&A
2011’s strong performance was largely driven by activity in the financial services sector, driven to a large extent by the banking crisis. Comprising almost one-third of the total deals (23 out of 80), financial services sector deals accounted for over two-thirds of the total deal value (€10.4 billion). These included the 98% investment by the National Pensions Reserve Fund in AIB; the €2.3 billion investment by the Irish Government in Irish Life & Permanent Group; and the €1.1 billion investment in Bank of Ireland by Fairfax Holdings, WL Ross & Co, Kennedy Wilson and others. As the banks continue to dispose of assets in 2012, it is expected that the financial services sector will continue to account for a majority of deals.
Ireland Attracts Overseas M&A investors
There was a notable dominance of foreign acquirers in 2011. Overseas buyers appeared in six of the top 10 deals and over half of the overall number of deals (45 out of 80), highlighting the attractive opportunities available in Ireland. This also reinforces Ireland’s reputation as a European hub with a strong track record for developing innovative businesses offering further growth opportunities. Unless derailed by uncertainty in the Eurozone, the influx of overseas buyers should help drive Ireland’s recovery in 2012 where businesses across the financial services, telecoms, media and technology TMT and pharma, medical and biotech sectors continue to present opportunities for interested investors.
Reputation for Innovation Proves Important
The traditionally strong area of pharma, medical and biotech accounted for a total of 14% of deals, showing that Ireland’s reputation for innovation and opportunities in these businesses continues to be attractive for potential investors. This sector is expected to remain strong in 2012 and, as the financial sector opportunities decline with the recovery of the banking sector in future years, pharma and TMT are likely to advance Ireland’s move towards a firm and sustainable recovery.
View the full William Fry M&A Review 2011 here
Contributed by Bryan Bourke.