| Global M&A transaction levels were at their highest level since 2000, writes Gerard Flood, and growth in Ireland was also strong. Across the entire market, the inevitable factors that conspired to making deals more challenging to complete included pension liabilities and agreement to the level of underfunding, achieving adequate satisfaction of an ability to put funding in place and on occasion a lack of trust between the parties to the deal. |
In global terms the past year has been extremely significant from an M&A perspective. Transaction levels have been at their highest level since 2000. The deal conversation throughout the year might have suggested greater than reported increases - however the acid test is not ‘the deal you talk about, but the one you close’.
Notwithstanding this, it was a good year globally with the Asia Pacific region dominating global growth in deal activity. The US remained top of the value tables, without however recording any growth and in fact there was a marginal decline in deal levels. The US experienced a value gap between buyers and sellers which dampened activity and lengthened deal timescales. However in global terms and looking forward to the next year there is high value deal pipeline.
The last year in Ireland has also been significant. From an overall KPMG perspective, the firm has been involved in M&A transactions in an advisory role including tax structuring, due diligence and corporate finance for many of the deals executed in the Irish market. For example, Corporate Finance completed 10 deals across a wide range of sectors including infrastructure, energy, property, food retail, facilities management, and distribution. A feature of this activity is that it has been predominantly Irish company initiated and Irish company acquired. The deals in the main have been mid-market in size, in the range €10m - €50m.
Factors in helping complete the deals undertaken to included the strong market position of the vendor company which presented an opportunity to expand further, a vendor understanding of what the purchaser was going to do to develop the business, the trust that built up between the parties to the deal and the vendors acceptance that the business was not to be family dominated or influenced in the future. Across the entire market, the inevitable factors that conspired to making deals more challenging to complete included pension liabilities and agreement to the level of underfunding, achieving adequate satisfaction of an ability to put funding in place and on occasion a lack of trust between the parties to the deal. Inevitably deal success is built on the principal of a mutually beneficial outcome for both parties, aided by the commitment and expertise of the advisors to both sides. |
Gerard Flood is head of corporate finance at KPMG.
|
| Article appeared in the March 2006 issue.
|
|
