‘Some deals get done in a weekend, but most are taking longer to close. We see more earn-outs and roll-overs’

This article was first published by the Irish Independent on Thursday, 30 January 2025. 

Ireland’s leading M&A law firm sees renewed interest in America for Irish deals, now that the election is over

The press release arrived at 3.10pm on January 9 and couldn’t have been clearer. “A&L Goodbody,” it said, “has today been announced as Ireland’s leading Mergers & Acquisitions law firm, with the most deals in 2024.”

Not only that, the Dublin legal firm had advised on “significantly more” Irish M&A transactions than any of its rivals, both last year and “in the last five years”.

The press release from Matheson came within an hour, and its claim was just as definitive. “Matheson tops the 2024 M&A league tables,” it crowed. In terms of the deals completed last year, the firm had won on both volume and value.

How could they both be right? It turns out the A&L Goodbody declaration was based on a calculation done by Mergermarket, an M&A intelligence publication, while Matheson’s relied on rankings compiled by the London Stock Exchange Group, a research firm.

Is this a case of comparing apples and oranges, I ask Richard Grey, head of M&A at Goodbody’s but who, coincidentally, was a senior associate at Matheson between 2005 and 2012?

“We put our announcement up on LinkedIn, and they put up theirs pretty soon after. Law firms are competitive by nature. So it’s not surprising they are using a different ranking system,” he smiles.

‘Clients expect that you are aligned with them, and if they are not the winning bidder then, effectively, you have got to take the pain’

“We would say Mergermarket is probably the best barometer. We have a good share of the market. Over the last five years we advised on something like 27pc more transactions than our next competitor, which is [Arthur] Cox. So from our perspective – and I would say this, obviously – we think we are the leader for M&A transactions, but it’s a high-quality leader market and there’s a lot of good advisers.”

A&L Goodbody says it acted on 61 “reportable” deals last year. Among the headline-grabbing ones were advising Exponent on buying Chanelle Pharma, Grant Thornton Ireland on its merger with Grant Thornton Advisers US, Blacksheep Fund Management on its acquisition of Distilled, owner of Daft.ie and DoneDeal, and Cimsa on its €330m purchase of Mannok Holdings, the building-materials and packaging group once owned by Seán Quinn.

It was a busy year, according to Grey, with his firm’s numbers up 15pc, and that only covers the classic M&A deals.

“We would do lots of other transactions – for example if there is one shareholder exiting, but they are not in a control position. To get in the rankings, there has to be what is perceived as a change of control.

“Compared to 2023 there certainly was an increase in M&A activity, focused on infrastructure, energy transition, and renewable energy in particular.”

That was despite a slowdown in American activity towards the tail end of the year, as the result of the presidential election was awaited. The concern wasn’t about who would win, Grey stresses, but just about having a clear outcome.

“In order to generate activity, people like certainty. Once the result was known, US activity picked up after that. And we’ve seen a lot of inbounds so far this year from the US – potential acquirers looking at Irish assets.”

The feeling is that Donald Trump will make M&As great again, because he may issue executive orders to cancel some regulations that increased scrutiny of deals, greatly slowing them up.

“As such, 2025 could well prove to be a vintage year for mergers and acquisitions,” International Banker speculated last Tuesday. A lot of deals, particularly in the banking sector, seem good to go.

“We are still seeing a lot of US interest into Ireland. For example, we are acting for a US client at the moment who is looking to buy a new plant here,” says Grey, who was in New York last week.

“We work a lot with US law firms, and their sense is that there are a lot of deals waiting to happen. The Federal Trade Commission has been taking an aggressive stance towards merger approvals, and they see that as being freed up a lot – the ability to transact.”

‘If you are not the successful bidder, you are going to have to take a haircut, or a reduction in fees’

Perhaps the most infamous takeover in American corporate history was brilliantly described in Barbarians at the Gate: The Fall of RJR Nabisco, widely regarded as the best book about business ever written. In the narrative about the battle for control of the company, there’s always a lawyer in the room, an attorney at every important meeting. Is that still the case?

Firstly, Grey stresses, the incidence of management teams, or other insiders, getting “sweetheart deals” is now very rare, because most people running a sales process will appoint a financial adviser straight off, and run it in a highly structured way. The winner is whoever offers the best terms, not necessarily the highest price.

“Lawyers tend to come in at a slightly later stage than financial advisers, who do due diligence,” he says. “We are brought in later, but before the process kicks off.”

M&A deals have a reputation of being good earners for lawyers. Is that fair? “It’s a reasonable comment,” Grey says, but points out that most deals now are bilateral transactions. If you win, there’s a success fee. If you don’t…

“In order to align ourselves with the client, you are working on the basis that if you are not the successful bidder, you are going to have to take a haircut, or a reduction in fees,” he says. “So, look, it’s still a profitable business but clients expect that you are aligned with them, and if they are not the winning bidder then, effectively, you have got to take the pain as well.”

He’s been doing M&A for just over 20 years, and one feature that has changed in that time is how long it takes for deals to close.

A&L Goodbody’s six teams, made up of 17 partners and 45 solicitors, are working on transactions now that may not finish for a number of months. One reason is that structures have become more complex, Grey says.

“It is somewhat unusual, although great if you are on the sell side, to get just a once-off consideration payment. More and more we see focus on earn-outs, and roll-overs – sellers rolling over some of their equity into a new vehicle. Those structures just take longer to put in place.

"If you have a willing buyer and seller with no regulatory approval needed, and it’s not a hot asset, we have done deals, substantial ones, over the course of one weekend. In general, though, they are taking longer and are more complicated.”

Disgruntled buyers suing after deals close are now comparatively rare. That’s because of Warranty Indemnity Insurance (WII), a product that most law firms use. Previously, a seller would give a set of guarantees about the condition of the business.

“So ultimately, if there was a claim, it would be against the sellers,” Grey explains. “More and more, rather than the buyer having recourse against the seller, there’s a WII policy in place. The buyer can recover under the policy.

“So in a way it makes the transaction less adversarial, because you are not sitting across the table from a person you might be suing at the end. We see [WII policies] in about 90pc of our transactions.”

Ireland has a disproportionately large number of M&A deals by European standards because so many big companies have an Irish entity in their corporate structure. Given that law firms are not allowed to advertise, how do the likes of A&L Goodbody get a piece of the action?

“We get a lot of recommendations from existing clients, and we also have good relationships with financial advisers,” says Grey. “What is becoming more common, as well, is serial M&A acquirers. With private equity becoming more dominant as an Irish transaction type, there are more repeat buyers. We act for a number of those – US and UK sponsors. Once they buy one asset in a jurisdiction, they often like to add to that, and get scale.”

‘There is going to be a continued focus on professional services, and private-equity interest in that sector’

Falling interest rates are good for M&A activity, since most private-equity transactions are at least partly funded by debt. Given that backdrop, and with the year of elections behind us and political stability perhaps ahead, the feeling is that the first half of 2025 could see peak M&A. What sectors will be active?

Professional services for one, Grey says. “The Grant Thornton transaction is being done over a series of jurisdictions. Evelyn Partners, another professional services roll-up, changed hands at the end of last year, being bought by the private-equity sponsor Apax. So there is going to be a continued focus on professional services, and private-equity interest in that sector.”

We can also expect continued consolidation in media, particularly in print and radio, and in insurance. Grey predicts that over the next 12 to 18 months, a number of insurance brokerages recently bought by private equity will change hands.

“There might be consolidation in that space. Also infrastructure, energy, energy transition, and any business supporting those services.”

Is he still getting job satisfaction after more than two decades of M&A? “I do enjoy the anatomy of a deal,” he confirms. “Most times they follow a well-known path and structure. I am head of the firm’s M&A group, so there’s a management role as well. But given the choice between doing a deal and managing, I would do the deal all day long.”

Date published: 10 February 2025