Improving or holding on to market share is key reason cited by companies looking to increase their footprint
The figure is up from 11pc last year, according to Aon’s M&A in Ireland report for 2024.
Clodagh Rochford, the head of M&A and transaction solutions at Aon Ireland, said that the M&A environment in Ireland has improved in the past 12 months, with lower inflation and interest rates beginning to reduce the cost of capital.
“While dealmaking conditions have improved, the cost of capital remains high and continuing uncertainty in global markets is having a dampening effect on M&A activity,” she said.
“Much of the global uncertainty stems from 2024 being the ‘year of elections’ with countries that are home to about half of the world’s population holding elections throughout the year.”
The report found that aside from the 14pc of surveyed firms in Ireland that are actively thinking about M&A activity in the next 12 months, a total of 35pc are considering the possibility of some type of merger or acquisition activity.
Protecting and growing market share is the top reason why businesses are considering M&A activity, with 42pc citing those factors.
A further 38pc are considering M&A to increase business efficiencies, while 37pc are mulling it to expanding into new areas.
But 40pc of businesses surveyed cited tax issues as one of the top three risks for M&A.
For 23pc, the biggest single concern is the tax rate that would apply to future profits following the deal. This is likely related to the continuing uncertainty surrounding the global tax landscape, notes the Aon report.
Another key issue for 17pc of firms is whether a return of profits to shareholders will be subject to tax and at what rate, with the classification of distributions, the application of withholding taxes and residence rules all feeding into that uncertainty, the report added.
The survey found that 64pc of Irish businesses that engaged in M&A reported that deals they were involved in had achieved their objectives. Among larger firms with 250 or more employees, the rate was 73pc.
“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,” according to Ms Rochford.
“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 Technology, Media & Telecoms (TMT) sector is the most active in mulling M&A activity, with 26pc of those businesses considering doing so in the next 12 months.
The survey found that 24pc of financial services firms are considering doing so.
Just over half, or 55pc of the firms surveyed, said they would prioritise human capital due diligence during M&A, while 42pc would prioritise cyber security or digital risks diligence, and 34pc would prioritise commercial or industry-specific risk diligence.
Additionally, 22pc of businesses would prioritise political risk diligence during M&A, and 19pc would prioritise ESG diligence.