69% of Irish business leaders (70% globally) view the “triarchy” of talent, technology, and trade as core to their future M&A business strategy, according to a new M&A report launched by leading global law practice Eversheds Sutherland LLP – ‘Putting the Pieces Into Place: The Next Drivers of Strategic M&A’.
Talent: 71% of Irish business leaders (72% globally) see talent retention and acquisition as important in their organisations’ business strategy over the next year. 64% of Irish business leaders (and 62% globally) believe the ‘Great Resignation’ is acting as a catalyst for M&A as the battle for talent continues.
Technology continues to drive organisations’ business strategies, with 76% of Irish business leaders (almost 80% globally) seeking to improve their cyber security and three-quarters seeking digital transformation. Globally, M&A is seen as a rapid way to absorb new technology and expertise, with 74% saying M&A was important in bridging technology gaps.
Trade: Impacted by supply chain disruption and trade sanctions, 73% of Irish business leaders (68% globally) say that increasing supply chain resilience will be a strategic M&A priority over the next year. 69% of Irish business leaders (72% globally) also see increasing supply chain resilience as important to their organisation’s business strategy over the next year. In addition, in April 2022, 60% of global business leaders said supply chain dislocation as a result of the invasion of Ukraine would make vertical integration an increasingly important business strategy.
The global Eversheds Sutherland study is based on opinion research conducted in early 2022 amongst 1,200 business leaders across 16 markets around the world including Ireland and Northern Ireland. Respondents from a wide range of sectors provided both a detailed and expansive global view. In April 2022, a supplementary piece of research amongst 75 global business leaders provided insight into how the ongoing invasion of Ukraine is impacting M&A activity.
Enda Newton, Corporate Partner at Eversheds Sutherland, said:
”We are pleased to launch our report ‘Putting the Pieces Into Place: The Next Drivers of Strategic M&A’ to the market. After a turbulent few years in the wider business landscape, several factors are impacting the M&A environment including the invasion of Ukraine, inflation and rising energy prices, rising interest rates, stock market turbulence, and the ongoing effects of the global pandemic. All of these considerations have prompted business leaders across the island of Ireland to reflect on how best to execute strategic M&A transactions in the current environment and position their organisations for the future.
“Notwithstanding these challenges, the study shows that organisations continue to face the same urgent strategic gaps that need to be bridged in order to grow. Our research revealed that the majority of Irish business leaders see talent, technology and trade as the main factors impacting the M&A landscape – these are the key strategic gaps that they will continue to seek to bridge through mergers and acquisitions activity.”
“While new, post-pandemic challenges remain, the Northern Ireland economy is rebounding at a quicker rate than other markets across the UK and Ireland. The economy in NI is growing again after a tough two years, with increased output and many sectors fully recovered after Covid. There is confidence among businesses again, with the NI Protocol, whilst remaining a sensitive issue, also helping to drive growth. Fully grasping the issues outlined in our report – talent, technology, and trade – will be key in continuing this upward trend and driving a strong M&A activity in Northern Ireland.”
Other key findings include:
Accelerating appetite: What dealmakers value
In an age of transparency and the ever-increasing use of social media platforms holding companies to almost immediate account, this research revealed that brand and reputation are most valued by 81% of Irish business leaders (77% globally), making them the number one factor when considering what business leaders will pay for an acquisition. Well-established attributes such as increased market share, intellectual property and robust financial performance are equally regarded by Irish business leaders as essential requirements when considering an acquisition (cited as important by 73%, 72% and 77% of Irish business leaders respectively).
Strong headwinds in 2022
Over two-thirds (68%) of Irish business leaders agree that the rise of protectionism is now creating a more complex environment for M&A and, globally, 67% believe that protectionism is making exposure to growth markets more difficult.
74% of those surveyed agreed that the ongoing invasion of Ukraine is harming M&A activity owing to the direct impact of sanctions. In addition, 70% of organisations acknowledge that the ongoing uncertainty around the Covid-19 pandemic is still a significant challenge.
Despite the turbulent start to the year, the market is often quick to digest major events as business leaders look to reassess and reposition. For further information on the outlook for 2022 and to read the full Eversheds Sutherland LLP report click here.