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Sources of finance for M&A Back  
Please rank in order of importance the sources of new funds for M&A/corporate finance transactions of the type covered by this survey
ABN AMRO
• Corporate investors
• Private investors
• Insurance companies
• Venture capital
• AIB Corporate Finance
• Debt Pensions/insurance funds
• Corporate investors
• Private investors
• Reinvested capital gains
• Corporate bonds.

In the current climate of strong earnings growth and with a low interest rate environment there is abundant capacity to raise debt to fund acquisitions for both public and private companies. If the current climate continues so will the predominance of debt financing with an increasing emphasis on the use of intermediate capital instruments.

Private investors will continue to represent a strong source of capital for pre revenue technology companies. Fexco tapped the venture capital market to finance its purchase of Global Refund while the buy-out of Jones was funded through private investor capital. As time goes on, there will be greater depth in the corporate bond market in Europe and over time there should be a shift in emphasis towards this type of funding.

BDO Simpson Xavier Corporate Finance
• Corporate investors/venture capital
• Private investors
• Debt finance from banks Reinvested capital gains
• Government agencies
• Pension funds
• New issue corporate bonds
• Insurance companies.

The advent of some serious private investors and international venture capital funds has changed the market place considerably. This has enabled many Irish companies to achieve critical mass without access to traditional capital markets, which seem cumbersome at this point in time.

CFI
• Corporate investors
• Private investors
• Debt finance from banks
• Reinvested capital gains
• New issue corporate bonds
• Pension funds
• Insurance companies
• Government agencies.

Chapman Flood Mazars
• Private investors
• Debt finance from banks
• Corporate investors
• Reinvested capital gains
• New issue corporate bonds
• Government agencies
• Insurance companies
• Pension funds

Davy Corporate Finance
Debt finance from banks: must be most appropriate source of funds for a lot of Irish companies now given the historically low cost of funds.

• Corporate bonds: allow corporates to access long term fixed low cost funding which is attractive given where we are in the interest rate cycle.
• Private investors: as regards equity becoming increasingly significant for private placements and small cap fundings. Reinvested capital gains also falls into this category.
• Pension funds/Insurance companies: Irish funds tending to focus more on larger caps. Reduced weightings in the Irish market but still significant.
• Corporate investors: significant for many early stage tech companies as a potential source of equity.
• Government agencies: usually first port of call for early stage companies. Amounts small in absolute terms.
(sources of finance not ranked)

Dolmen Corporate Finance
• Corporate investors
• Pension funds
• New issue corporate bonds
• Debt finance from banks
• Insurance companies
• Private investors
• Reinvested capital gains
• Government agencies.

Deloitte Corporate Finance
In order of importance and ease of accessing funds, we would consider the following ranking:
• Own resources are often used first
• Debt finance from banks, being so cheap and available currently is an obvious next choice
• Venture capital/private equity investors
• Pension fund/institutional funds
• Government agencies
• Corporate bond market, very underdeveloped and not of wide application to funding M&A transactions.
Ernst & Young
• Corporate investors
• Private investors
• Pension funds
• Debt finance from banks
• Reinvested capital gains
• New issue corporate bonds
• Insurance companies
• Government agencies.

Goodbody Corporate Finance
• Private equity funds
• Corporate investors
• Debt finance from banks
• Pension funds
• Insurance companies
• Private investors
• New issue corporate bonds
• Reinvested capital gains
• Government agencies.

Grant Thornton
• Debt finance from banks
• Corporate investors
• Private investors
• Government agencies
• Reinvested capital gains
• New issue corporate bonds
• Pension funds
• Insurance companies

IBI Corporate Finance
• Corporate investors
• Debt finance from banks
• Reinvested capital gains
• Pension funds
• Insurance companies
• Private investors
• Government agencies
• New issue corporate bonds

Merrion Capital
• Corporate investors
• Debt finance from banks
• Pension funds
• Insurance companies
• New issue corporate bonds
• Reinvested capital gains
• Private investors
• Government agencies


NCB Corporate Finance
• Debt finance
• Venture capital
• Private equity
• Pension funds
• Corporate investors
• Corporate bonds.

For the vast majority of M&A transactions a company will use its own funds plus bank debt, which can currently be borrowed at extremely competitive rates. Venture capital and private equity are frequently used in MBO’s and MBI’s to bridge the gap between the consideration and the level of debt the company can bear. Paper for paper transactions are quite prevalent, especially recently in the technology sector.

PricewaterhouseCoopers

Dublin’s capital markets are now very sophisticated and new funds are readily available in the form appropriate to the risk profile of transactions being undertaken. Bank debt and, to a lesser extent, institutional funds remain the most important sources of finance for public company acquisitions. Increasingly, private equity placements, especially in the technology and telecoms sectors, are being taken up by private investors, many of whom are reinvesting capital gains. The 20% rate of capital gains tax has been a major encouragement to investors to realise existing investments and redirect funds into new and often high risk opportunities. This is a very positive development as it underpins the availability of risk capital for new projects.

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