Ezra Bailey

Is M&A the key to innovation and sustainability for Irish CEOs

CEOs are leveraging M&A for tech-driven growth and market expansion, embodying innovation and sustainability in a dynamic business landscape.


In brief

  • CEOs are leveraging M&A for technological innovation, market expansion, and geographic growth.
  • The global M&A market has seen a significant increase, with a focus on strategic acquisitions and alliances that support sustainability and adaptability in a dynamic business environment.

Is M&A the key to innovation and sustainability for Irish CEOs

In the rapidly evolving business landscape of 2024, global CEOs continue to use mergers and acquisitions (M&A) as a means to navigate innovation and transformation across their businesses. The latest CEO Outlook Pulse Survey shows businesses are engaging in M&A activity with renewed vigour, considering it a strategic support for addressing key priorities. The survey found that acquiring technology, new production capabilities and innovative startups, growing market share and accessing new geographies stood out as the top three strategic drivers for CEOs pursuing M&A.

Irish M&A: Growth and innovation

In Ireland, the M&A landscape is particularly vibrant, with CEOs and investors showing a keen interest in a variety of transaction opportunities, from trade sales to private equity investment to strategic alliances. Ireland's thriving tech sector and business-friendly climate has fuelled a boom in deal-making, outpacing the UK and EU areas, which is likely to continue, as companies pursue innovative technologies and seek to capitalise on the entrepreneurial energy of startups which have scaled. The strategic imperatives for Irish M&A are expected to align with global patterns, emphasising the acquisition of larger market shares, expansion into new markets, and the integration of advanced technology into existing operations. This is especially pertinent for Ireland, given its status as a European tech hub.

Global M&A: Rising trends

The first quarter of 2024 has seen a 36% increase in deal announcements compared to the previous year, with a staggering US$796 billion in transactions. This uptick has been particularly notable in the United States, benefiting the energy and life sciences sectors, and in Europe, especially in the United Kingdom. Despite some sectors experiencing slower activity, the overall sentiment among CEOs is optimistic.

The global capital markets are bolstering the M&A narrative, with debt markets up by 16% and equity markets experiencing a slight increase. This financial strength presents opportunities for acquisitions, even as companies remain wary of potential funding market contractions due to geopolitical tensions.

Corporates are finding value in forming strong alliances, collaborating with investors and governments to accelerate the shift towards sustainability. In this cooperative setting, M&A becomes a strategic tool for creating lasting value and meeting environmental, social, and governance (ESG) goals.

M&A: Ensuring strategic objectives are met

With 40% of CEOs stating that their primary objective for pursuing acquisitions is to acquire technology, new product capabilities and innovative startups will enable them to stay ahead of competitors. Buyers need to be laser-focussed on their approach to financial, legal, and commercial M&A due diligence to ensure that identified targets will actually help those acquirers achieve their strategic ambitions, particularly in a rapidly changing technological environment. In such a landscape, CEOs may be reluctant to risk everything on a single deal to acquire technology and so creative variations to traditional M&A structures may need to be considered to offer increased flexibility and risk-sharing as a means to address those technology uncertainties.

CEOs are also signalling their readiness to streamline their portfolios, shedding assets to address ESG goals, and to refine their focus for the challenges ahead. Sustainability due diligence is playing an ever-increasing role in M&A transactions to assist buyers and sellers to ensure that those deals are aligned with their own corporate sustainability objectives.

This strategic deal-making is not merely a short-term solution but is part of a broader, long-term vision to build resilience and adaptability for an unpredictable future.

M&A Future: Irish CEOs' strategy

With global funding markets more receptive in 2024, Irish acquirers may find it easier to secure financing for deals and may be the targets of larger companies seeking to expand their geographic footprint or product offering. However, they must remain cautious of potential market tightening as political events unfold. For those looking to divest, the market's increasing appetite for acquisitions and the continued resurgence of private equity could provide favourable conditions. Nonetheless, the timing of PE's full-fledged return to the M&A space remains a little uncertain for large transactions as they await potential interest rate decreases particularly in Eurozone and the UK. Irish companies must stay attuned to shifts in monetary policy that could influence the M&A landscape.
To provide corporate sellers with more control over M&A transactions, particularly as a counter-measure to lengthy deal timelines that have become a feature of the M&A market in the last few years, time is well spent by those sellers preparing potential divestment assets for sale, including anticipating issues of particular relevance to likely buyers of those assets and identifying potential regulatory approval requirements that may add to longer deal timelines. Sell-side due diligence of prospective buyers can also be warranted to help flush out any potential roadblocks or delays that may arise from ever-increasing competition law, foreign direct investment and foreign state aid regime requirements.

Summary 

The M&A momentum for the remaining months of 2024 is characterised by strategic foresight, adaptability, and a commitment to sustainability, as both global and Irish corporate leaders and investors navigate the complexities of a rapidly evolving business world.

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