- AM&A optimism takes hold among dealmakers in Ireland, according to Aon 2024 M&A report
- Businesses reported high success rates for completed M&A deals – 73 percent of companies with 250+ employees who engaged in M&A activity in the past 12 months said that it achieved its objectives
- Technology, Media, and Telecom (TMT) sector leads the way in intended activity (26 percent), followed by Financial and Professional Services sector (24 percent)
- Only 19 percent of businesses rate environmental, social and governance factors as a priority for due diligence
DUBLIN, 11 September 2024 - Aon plc (NYSE: AON),), a leading global professional services firm, today published a new report that reveals growing optimism among dealmakers in Ireland, signalling a more positive outlook for mergers and acquisitions in the next twelve months.
Aon’s M&A in Ireland 2024 Report, which surveyed 331 businesses across Ireland between June and July 2024, found that more than 1 in 3 companies (35 percent) in Ireland are either actively considering or may consider engaging in a merger or acquisition in the next 12 months. The numbers actively considering engaging in M&A rising to 14 percent from 11 percent last year.
Protecting and growing market share (42 percent) is the top reason why businesses are considering M&A activity, followed by increasing business efficiencies (38 percent) and expanding into new areas (37 percent).
More than 1 in 3 businesses (34 percent) are considering M&A targets across multiple jurisdictions. The rest of EMEA (outside of Ireland) is the top overseas region (35 percent) for intended activity. North America (18 percent) and the rest of the world (28 percent) make up the other most popular target regions.
Findings reveal high success rates for completed M&A activity. 64 percent of businesses that engaged in M&A reported that deals had achieved their objectives. That success rate is even higher for larger organisations – nearly 3 in 4 businesses (73 percent) with 250 employees or more reported that completed activity had been a success, a 12-percent increase on last year. Only 12 percent of these organisations stated that M&A activity had not yet achieved its strategic objectives.
Commenting on the launch of the report, Clodagh Rochford, Head of M&A and Transaction Solutions at Aon Ireland, said: “With the pace of inflation slowing and lower interest rates beginning to reduce the cost of capital, dealmaking conditions have undoubtedly improved over recent months. This is clearly reflected in the findings of our M&A in Ireland 2024 report which reveal that more businesses in Ireland are considering mergers and acquisitions than at any point in the last two years. Those who have engaged in M&A activity over the past 12 months have reaped the rewards.
“However, the risk environment continues to grow in complexity. From cyber security and climate change to an evolving human capital landscape, businesses need to broaden their due diligence to take account of the changing business landscape and how evolving risk can impact valuations and possibly derail a deal.
“Given the high rate of successful transactions and possibility of further interest rate cuts in the second half of the year, there is good reason to believe that activity will further accelerate in the months ahead. However, with significant legislative changes on the horizon and heightened geopolitical tensions, businesses continue to navigate a complex and rapidly evolving M&A landscape.
“The insights from Aon’s M&A in Ireland Report published today will help industry leaders across the country to make better informed decisions on their M&A journey. At Aon Ireland, our team of experts are harnessing the power of data to support businesses as they navigate this complex environment and embark on successful M&A deals in the coming months.
Sectoral insights
More than 1 in 4 businesses (26 percent) in the Technology, Media, and Telecom (TMT) sector are considering M&A activity, with that sector leading the way in intended activity over the next year. The Financial and Professional Services (FPS) sector comes in at a close second, with 24 percent of organisations in that sector also considering M&A activity, a 7 percent rise across the sector since last year.
Nearly half of TMT businesses (48 percent) are considering targets in EMEA outside Ireland, while 20 percent are looking at targets in North America and 31 percent at the rest of the world.
Evolving risks
The risk landscape for Irish companies continues to evolve at pace. As the macroeconomic environment has stabilised, concerns among decision makers about the risk presented by high inflation have fallen by a considerable 15 percent since 2023. However, for the third consecutive year high inflation (41 percent) remains the top current risk to M&A for Irish businesses. Weak due diligence (41 percent) and taxation issues (40 percent) make up the top three risks for companies considering M&A in Ireland.
40 percent of businesses cited tax issues as a key factor when considering M&A activity. The tax rate that would apply to future profits following a transaction is the top tax concern (23 percent) for businesses in Ireland, indicating continuing levels of uncertainty around the ever-evolving global tax landscape.
Growing importance of human capital
Human capital has emerged as the top due diligence priority for businesses outside of the traditional considerations of legal, tax and financial. More than half of businesses (55 percent) rated people related factors as a top consideration, a 13 percent rise on last year.
A tight labour market and skills shortages continue to impact companies, with staff retention (55 percent) highlighted by business leaders as the most important human capital consideration. 42 percent of leaders highlighted comparing target employees’ compensation & benefits to existing staff as a key consideration for M&A activity.
Legislative change is also causing businesses to increase focus on human capital. The introduction of pensions auto enrolment (42 percent) is the most significant legislative concern for businesses, with its introduction in January 2025 potentially impacting labour costs. 1 in 3 decision makers (33 percent) are concerned about the introduction of pay transparency/gender pay gap reporting, with the landmark EU Pay Transparency directive due to come into force in June 2026.
Broadening due diligence
Other key factors considered by leaders in due diligence include cyber security (42 percent) and commercial or industry-specific risks (34 percent). More than half of businesses (52 percent) rated cyber security and technology risks as so important that they could prevent a deal. Nearly 4 in 10 leaders (38 percent) identified the EU’s NIS2 cybersecurity directive as a key policy concern, which will require many companies to rapidly enhance cyber capabilities.
Managing ESG risk
While only 19 percent of businesses consider environmental, social and governance (ESG) related factors a due diligence priority, they continue to rise in the M&A agenda, up 8 percent since last year. Only 21 percent of businesses say they never consider ESG in due diligence, with the majority of organisations rating ESG factors as important either before (34 percent), during (31 percent) or after (15 percent) a transaction.
To download Aon’s M&A in Ireland 2024 Report, visit https://aon.io/4e1WOOo.
About Aon
Aon plc (NYSE: AON) exists to shape decisions for the better — to protect and enrich the lives of people around the world. Our colleagues provide our clients in over 120 countries and sovereignties with advice and solutions that give them the clarity and confidence to make better decisions to protect and grow their business.
Aon Solutions Ireland Limited trading as Aon, is the founder of the AON Ireland MasterTrust and is a private company limited by shares and regulated by the Central Bank of Ireland. Registered in Ireland No. 356441. Registered office: 5th Floor, Block D, Iveagh Court, Harcourt Road, Dublin 2, D02 VH94, Ireland.
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Methodology for Aon’s M&A in Ireland 2024 Report
From June to July 2024, iReach Insights conducted research on behalf of Aon Ireland into attitudes and actions regarding M&A activity in Ireland. The survey received 331 responses from business decision makers across the country, with 91 mid-sized SMEs, 101 large SMEs and 139 enterprises with 250+ employees taking part in the research.
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