Covid causes €80m M&A pause at Grant Thornton

AROUND €80m worth of merger and acquisition activity was paused at the onset of Covid-19 within the corporate finance group at Grant Thornton, a professional services firm, in Ireland.

Patrick Dillon, head of corporate finance at Grant Thornton Ireland, said a number of merger and acquisition deals were stopped or paused across the firm when Covid-19 hit. Since then, he said many of the deals have either reignited, are in the process of starting again or have not got back yet.

On the stalled deals, Dillon said: “I would be confident that the majority of those will complete. No one has completely withdrawn, it’s a case of let’s figure it out. Obviously, the value may be looked at.”

Dillon said that Grant Thornton Ireland had a number of live merger and acquisition deals on the books that it hoped to close by the end of the year with an enterprise value of approximately €100m. According to Dillon, from conversations with colleagues and people in the market, the onset of Covid-19 led to several pauses in merger and acquisition activity across Ireland as anxiety hit the market.

“It was a natural reaction from people, they said ‘right let’s not write big cheques’,” he said, of the initial two weeks when Covid hit.

Dillon said he had seen an “improvement in confidence” since the initial fear factor caused by the pandemic.

The firm has closed a few deals recently and is optimistic of picking up more.

“I have been pleasantly surprised and impressed with how resilient business has been,” he said. “It’s not like we are going to catch up in the second half with what didn’t happen in the first half,” he added. “I think it will be a recovery in activity. It doesn’t make sense that we are going to have a flood of M&A in the second half of the year. I don’t see it.”

For businesses, Dillon said it was important that they now took the opportunity to get out ahead and be proactive regarding funding. He added that Grant Thornton aims to now be in the middle of helping businesses to do that.

“The good companies will get out ahead of this,” he said. “[They] will get their cash flow projections, their business plans prepared and will know what their requirement is and then start looking at how to start funding that requirement.

“Getting advice and going on the front foot with the banks and figuring out what the banks will do, and figuring out how to source the additional funds, the good companies will and should get out ahead of that.”