Private equity is paying premiums to lock up exclusivity in quickfire deals - an Irish Independent article

This article was first published in the Irish Independent, 9 July 2021.

Cash-rich private equity funds are paying extra to get priority access to acquisition targets in the Irish market, accelerating an already active market for deals. The buyers are cutting back on due diligence time to complete deals within short exclusivity windows rather than get into drawn-out bidding processes with rival bidders. "Private equity is awash with money and paying full value, often after very competitive processes,” A&L Goodbody head of mergers and acquisitions Richard Grey told the Irish Independent. "More often they are buying exclusivity and concluding deals within five to seven days to minimise transaction risk. in some cases you’ll see a shortened due diligence process and the buyer will indemnify the sale instead.”

A&L Goodbody was the top Irish law firm for M&A activity in the first half of the year, beating rival Arthur Cox, advising on 23 transactions with a combined value of €51bn, according to new rankings by independent M&A data firm Mergermarket. A&L has been part of some of the biggest deals of the year so far, including acting for NatWest on the sale of Ulster Bank assets to AIB and the bid for UDG Healthcare by New York private equity firm Clayton, Dubilier and Rice.

Mr Grey said private equity buyers are looking at both listed and private Irish companies in healthcare, technology and financial services as fund managers look to place client cash. Private equity is flush due to pandemic savings getting channeled towards investments and because of record levels of initial public offerings in the last year that have allowed PE funds to cash out of earlier investments. The last 12 months have been especially active in the Irish market after deals dried up in the first few months of the pandemic. 

Mr Grey said the second half of 2021 was likely to see an increase in financial services deal making with Davy, Ulster Bank and KBC all in the middle of transaction processes. He also mentioned food as a sector to watch. He said Irish tech and life sciences entrepreneurs now had global reputations that were attracting buyers, but that more founders are looking to hold out for IPOs. "Entrepreneurs are holding onto assets longer, taking on cash and heading towards IPO. I think we’ll see a couple of those in the next year.”

Date published: 14 July 2021