The value of mergers and acquisitions (M&A) in Ireland collapsed to the lowest level since the global financial crisis in the first three months of this year.

M&A with any Irish involvement reached $1.5bn (€1.4bn) during the first quarter of 2023, an 87pc decline compared with the first quarter of 2022 and the lowest start to the year since 2009 – the pit of the financial crash here – according to new figures prepared for the Irish Independent by data provider Refinitiv, part of the London Stock Exchange Group (LSEG). 

The data shows the toll rising debt costs, high inflation and heightened uncertainty over the economic outlook including renewed fears of a looming recession are having on appetite for deal making. Huge volatility on equity and bond markets has also made valuations especially difficult in the past year. 

While the number of Irish deals held up better it was still down more than a quarter compared with a year ago.

Ian McFarlane, Ireland Country Manager for LSEG, said deal flow was still relatively high in historic terms,

“Irish M&A deal values stalled in quarter one, to the lowest first quarter total since 2009 during the financial crisis. Deals worth $1.5bn were announced during Q1, down 87pc year over year. In a positive note the number of deals continues to remain high with 115 deals, which is the third highest first quarter of all time, but average transaction values have declined significantly.”

Of deals that did happen, Arthur Cox and William Fry shared the spoils as top legal advisers with five transactions apiece in the quarter, the data shows. Davy Stockbrokers, owned by Bank of Ireland, was the top financial adviser.

Refinitiv’s global M&A data shows the decline in Irish deal flow is significantly worse even than battered international activity during the early part of the year. 

Global M&A fell 44pc in the first three months of 2023, with even bigger declines in the mega deal space of acquisitions valued at $10bn or more and a near halving of cross-border activity. 

While the long-term value created as a result of mergers in particular has long been disputed, the sharp drop in activity in a short space of time is a sign of global economic stress, because it indicates increased reluctance among corporate leaders to commit to long-term investment as a result of higher costs or greater pessimism. 

The Irish deal tally for the year so far shows deals involving an Irish target totalled $579m, a 12-year low but mostly involving a cross-border buyer.

Outbound activity totalled was just $137m, down 97pc from last year and the lowest first quarter total since 2009.

There were some big deals, including Kerry Group’s agreement to sell its sweet ingredients portfolio to Advent International’s IRCA for $536.7m, but mega deals appear to be off the agenda.

Uncertainty around the global banks means that is not likely to change soon, with lenders now incentivised to take an extremely cautious approach to their own capital following the high-profile collapse in confidence in Silicon Valley Bank and later Credit Suisse which eventually triggered government-backed rescues and have heightened fears of lurking risks on other banks’ balance sheets.