Merger and acquisitions to increase in the north during 2020, survey finds

Office workstation top view of business people working around M&A, keyboard, calculator, phablet and money on wooden table - merger and acquisition concept.
Ryan McAleer

ACTIVITY in the north's mergers and acquisitions (M&A) market will increase this year, despite significant economic and geopolitical uncertainty, a new survey suggests.

KPMG's annual M&A outlook report, which is based on feedback from dealmakers, said 93 per-cent of respondents now expect M&A activity to remain at or above 2019 levels.

An improvement on the 76 per cent who expressed similar sentiment last year, KPMG said the survey detected a “definite sense of change”, although macroeconomic uncertainties look to be swaying sentiment in favour of buyers, with 17 per cent viewing 2020 as a sellers' market compared to 38 per cent last year.

The results were markedly different from responses south of the border, where 38 per cent of respondents said 2020 would be a sellers' market.

“Following a turbulent 2019, 2020 has started with the prospect of relative stability,” said Russell Smyth, deal advisory partner at KPMG.

“A return of the devolved institutions, a stable conservative majority in Westminster and clarity that Brexit is at least going to happen. That said, US trade policy, exchange rate fluctuations and the uncertain implications of Brexit will ensure strategists, and corporate dealmakers, won't have an easy time.”

Technology is expected to remain busy with 31 per cent of respondents pegging it as the busiest sector for acquisitions in 2020, while agribusiness and food (22 per cent) and energy and infrastructure (17 per cent), were placed second and third respectively.

The survey also found that 85 per cent of dealmakers believe that any outcome which provides more certainty or one which sees the UK leaving the EU with a deal would prompt more activity in the M&A market in 2020

The report suggests that a key issue for dealmakers in 2020 will be whether a new free trade agreement will be agreed before the transition period ends at the end of 2020.

KPMG said that for more opportunistic companies across the island, 2020 may still present an opportunity to acquire and build positions in the UK market through strategic acquisition.

“The scale of available capital in the market has undoubtedly contributed to survey respondents' optimism for the year ahead, which is equally optimistic among both NI and RoI respondents,” added Russell Smyth.

“Private equity involvement and the robust lending market, with ever-developing debt options, will be key enablers for deals in 2020.”

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