Irish businesses are finding the corporate finance world is looking remarkably like their oyster right now.
1 Access to finance
"One of the biggest trends we are seeing is that small businesses here have access to international finance. Previously growth -oriented SMEs could only access local bank debt. Now a range of options is available to them, including a lot more interest from international private equity funds," says Katharine Byrne, partner and head of BDO Ireland's corporate finance team.
“SMEs now have access to capital markets, to international equity funds, and to a range of debt, not just term loans or invoice discounting from their bank, but new forms of finance.”
2 Overseas investor interest in Irish companies is growing
"Ireland has a lot of good export-oriented service businesses. We're a hub for technology, particularly fintech. We have a lot of companies of scale now, which have grown overseas but kept themselves based in Ireland. In the next 10 years we will see that come to fruition. It won't just be the big food businesses, like Glanbia and Kerry, but Irish tech and fintech service-type businesses who will be major international players too."
And not just the tech sector either. "We're seeing UK funds buying Irish businesses and what's significant is that these are no longer just tech businesses, which are the traditional targets, but non-tech sector businesses too," says Anya Cummins, head of mergers and acquisition at Deloitte.
She points to the recent MBO of insurance broker Arachas, backed by UK private equity firm Sovereign Capital, as a case in point.
“Ireland has come from being the small print in some of the UK private equity houses’ thinking to a much larger part. We are seeing huge in-bound interest,” says Eamonn Hayes, managing director of Capnua Corporate Finance.
3 Irish companies acquiring abroad
This is happening particularly in the US, according to Anya Cummins. “Irish businesses are performing strongly and looking at their international growth strategy and acquisitions are a part of that. We have a number of high growth businesses here now. Irish businesses, as they scale, are always going to internationalise early because the market here is so small. Outbound M&A has always been a factor of that, but now we are seeing more of it,” she says.
“The MBO market is strong here too, with private equity backing management teams, strong equity and debt – not just from banks but alternative finance providers. Businesses are performing well and now have lots of options, with the result that the M&A market is extremely active.”
4 The advent of alternative finance providers
This is helping reduce the reliance of Irish business on bank debt, so that it may become more in line with European norms.
"The growth in alternative finance providers has a number of drivers," says Patrick Reynolds, CEO of trade finance house Credebt Exchange. This includes the often occurring mismatch between the amount of credit required by businesses here as they move increasingly into a growth phase, and the amount available to them from banks still scarred by recession.
“The bank may not want to increase their credit level, because that is the level it is comfortable with. In those cases, the business owner has to go somewhere else,” says Reynolds, whose business is growing by more than 80 per cent a year.
5 Finally, Brexit is starting to have an impact on the corporate finance landscape here
"Ireland was already looking rather shiny and nice but now it is looking even more so because it is completely stable and secure," says David O'Kelly, corporate finance partner at KPMG.
“If you are thinking of buying a business in the UK, or buying one in Ireland, there are things you can take for granted here when it comes to your acquisition analysis that you can’t about the UK anymore.”
