More than a quarter of companies considering an acquisition or divestment are motivated by a lack of staff.
While only 18% of Irish businesses would consider a merger or acquisition (M&A) in the next two years, 28% would do so to find workers, according to a survey by consultants Aon.
According to the survey, this was the third biggest reason for engaging in M&A activity, after the desire to increase “business efficiency” and to protect and grow market share. .
Business leaders are increasingly focusing on ‘human capital’ when evaluating a potential deal, with 38% saying it’s a priority area for ‘due diligence’. just behind finance.
Unemployment and vacancy rates there are at record highs, with many companies struggling to fill positions despite higher wages and more benefits.
Job vacancy rates in the professional, scientific and technical sectors were almost three times the national average of 1.6% in the second quarter, according to data from the Central Bureau of Statistics.
Vacancies in financial, insurance and real estate companies were about double the average.
But a separate survey by recruiting experts Manpower, also released today, found that employers – especially tech companies – intend to slow down hiring significantly later this year.
A more cautious stance among Irish businesses comes after a record year for Irish mergers and acquisitions in 2021
Aon’s Irish M&A Report shows Irish companies are increasingly holding back on M&A decisions, with 70% saying they “don’t know” whether they will engage in any activity over the next two years.
Only 7% say they are “more likely” to engage in M&A activity in the next six months, rising to 11% in the next 12-24 months.
Globally, 68% of companies expect the number of M&A deals to increase over the next 12 months.
The more cautious stance from Irish businesses comes after a record year for Irish mergers and acquisitions in 2021, with a total deal value of over €24 billion.
This year has also started well, with tech unicorn Wayflyer, Cork-based fintech Global Shares and property firm Hibernia REIT among the biggest deals of 2022 so far.
But rising inflation is now the biggest risk for 69% of Irish companies considering M&A activity, with high valuations a concern for 45% and a lack of ‘sustainable investment options’ a problem for 43%.
The current geopolitical environment was a risk for 39% of the 290 companies surveyed.
“As the world began to recover from the global Covid-19 pandemic, spurring a bumper year for global M&A activity in 2021, the M&A landscape has changed again,” said Karl Curran. , head of mergers and acquisitions at Aon Ireland.
“The invasion of Ukraine has raised geopolitical tensions and the economic impacts are already being felt around the world.”