International Corporate / M&A - Ireland – Paul White

A&L Goodbody’s Corporate M&A practice has been at the forefront of Irish transactional activity, having topped all leading legal adviser tables (including Mergermarket and Refinitiv) for volume of deals in 2022. A&L Goodbody is the only Irish law firm listed in Tier 1 across all 11 areas in the 2023 IFLR1000 directory rankings, and 40 lawyers – across all areas – have been ranked and recognised by IFLR100 in 2023. ALG’s Corporate M&A practice continues to respond to clients’ requirements in an increasingly data and technology-driven environment. The firm continues to make significant investments in the design and development of bespoke, in-house client solutions to resolve business issues and to enhance efficiency and accuracy throughout the firm.

The firm promoted a new Corporate and M&A Partner (Stephen Quinlivan) and a new Corporate Transactions and Advisory Group Of Counsel (Andrea Hannon) in January 2023, emphasising the investment and strong client demand in one of the firm’s core areas. Stephen Quinlivan has a unique speciality in corporate insurance transactions, and acts in the majority of major insurance sector M&A and international re-organisations that the firm is involved in.

Richard Grey, Head of M&A at A&L Goodbody, is often approached by Ireland’s leading national publications to provide expert commentary on trends in the market. This further showcases our positioning as the top Irish law firm for M&A activity.

A key differentiator is our ability to offer clients the most extensive range of specialist legal services available in Ireland, ensuring our clients are provided with high-quality holistic advice from the combined Dublin and Belfast teams, along with colleagues in London and New York. This is further emphasised by Corporate and M&A Partner Deirdre Geraghty, who recently moved to our New York office to support the increasing client demands in the US, and the move of M&A Senior Associates Phil Fogarty and Conor Maginn to our London office in Q4 2022, supporting our Irish law offering in London.

We continue to act as Irish advisers of choice on deals of complexity, scale, innovation and significance in the Irish legal market. We have a particular speciality in advising on large-value, complex, cross-border mandates.

In addition to acting on the largest public and private transactions in Ireland, we are also market leaders in the mid-market M&A space. Mid-market Irish businesses have continued to attract significant M&A attention, reinforcing their position as critical drivers of M&A activity in Ireland. Pharma, Financial Services, Technology, Renewable Energy and Food & Beverage have been some of the most active sectors.

UK, European and US Mid-market private equity funds have pursued Irish transactions in such sectors as insurance, leisure, fintech, healthcare and IT services, and we continue to secure roles on many of the most high-profile private equity mandates in the Irish market. In the past year, we have advised on a range of buyouts, exits, minority investments and take-privates involving well-known Irish and international private equity investors and their respective portfolio companies.

Irish law is a common law jurisdiction with a shared legal heritage with the UK. Ireland is the only common law jurisdiction in the EU and is English language based.

Irish and English corporate law codes have many common features, constructs and concepts – as each does with the US federal laws, and those of many US states.

Ireland’s Companies Act 2014 and subsequent changes also reflect EU developments applicable to member states.

Recently, we have noticed an appreciable dip in traditional M&A and private equity transactions. The deals that have been closing in 2023 have largely been strategic acquisitions, and have primarily been struck on a bilateral basis. We have not seen a lot of proposed transactions being shopped around on the open market.

There has also been an uptick in bridge financings, largely comprised of insiders, and the use of convertible instruments has been more commonplace than typical.

Furthermore, we have seen increased activity levels in corporate reorganisations, joint ventures and governance mandates more generally for both domestic and multinational groups.

A&L Goodbody advised Immedis Limited and its shareholders on its sale to UKG Inc, a leading global provider of HR, payroll and workforce management solutions. This transaction, which has been reported to rank as one of the largest fintech exits in Irish corporate history – and one of the largest private company sales in 2023 – will help UKG support their customers to transform multi-country payroll, and provides exciting career opportunities for 370 Immedis employees worldwide as part of the UKG business.

The transaction also demonstrates A&L Goodbody’s market-leading ability to guide ambitious and globally focused companies through their entire life cycle – from inception to multiple successful equity fundraisings and exit. This deal was another excellent example of how our approach to relationship building at an early stage provides the team with the in-depth knowledge of the intricacies of the business required to guide the company through a successful exit. It also serves as an example of A&L Goodbody’s leadership of cross-border transactions, as the target group encompassed Irish, US and Bulgarian entities.

A&L Goodbody is currently advising Zurich Insurance on the relocation of its European insurance business from Ireland to Germany. It is taking place as a cross-border relocation under the EU’s so-called “mobility” directive, which allows a company (without being dissolved, wound up or going into liquidation) to convert the legal form under which it is registered in its existing EU member state into a legal form of another EU member state, and also move its registered and head office to such other EU member state. The project is the first of its kind in the Irish context.

Meanwhile, A&L Goodbody has advised American International Group and its subsidiary, Corebridge Financial, on the sale of Laya Healthcare Limited to AXA for €650m. Laya Healthcare, which is the second largest health insurance provider in Ireland, is a full-service managing general agent headquartered in Cork, Ireland, offering a diverse suite of innovative health insurance benefits and services in the Irish health insurance market, along with life insurance and travel insurance. The transaction is expected to be one of the largest transactions in the Irish market in 2023, and is an important milestone in Corebridge’s strategy of focusing on its core life and retirement business in the US.

The transaction was carried out under an extremely accelerated timetable, and demonstrated A&L Goodbody’s ability to quickly field a large, multi-specialist team of lawyers and provide pragmatic and business-focused advice to ensure the parties’ commercial objectives were met.

Rising interest rates have impacted the structuring of deals, resulting in lower leverage and a greater need for equity. Interest rate hikes have also led to an increased use of deferred consideration structures, including earn-outs. These and other mechanisms have assisted private equity sponsors with a renewed focus on downside protection. We are also seeing sponsors increasingly look at smaller assets as platforms for buy-and-build strategies.

Despite global economic uncertainty, there is cautious optimism that Ireland’s M&A market will continue to be busy in H2 2023. More cautious buyers – together with the anticipated enactment of the Screening of Third Country Investments Bill into law – may lead to increased regulatory scrutiny and lengthened deal timelines.

It is also expected that there will be an increase in the level of US PE activity in the Irish market. While large US PE sponsors have historically been active in the market for larger assets, expansion in the number of mid-market US PE sponsors and growth equity providers – similar to the emergence of the UK mid-market PE sponsor activity in the Irish market – is anticipated. We would expect this increase in activity to emerge as and when interest rates, and the debt markets, more generally stabilise.

In the last number of years, M&A activity in Ireland has revolved around the areas of technology, healthcare, financial services and, increasingly, the energy and infrastructure space. Tech-adjacent sectors, such as heating, ventilation and air condition (HVAC), are also active, particularly those that have built up competencies in the data centre space. In particular, within the energy and infrastructure space, one of the busiest sectors from an Irish perspective has been the renewable energy sector. A key driver of this is Ireland’s ambitious renewable energy targets, the most material of which is that by 2030, 80% of Ireland’s energy requirements will be satisfied by renewable energy sources. These targets have driven increased interest in the sector from long-term investors, such as pension and sovereign wealth funds.

A&L Goodbody consistently works with large international firms across several jurisdictions. These firms are typically full-service, and have their own SMEs. However, in certain jurisdictions, it may be the case that a local SME needs to be engaged, although that would be the exception.

Our high-growth technology companies programme has been specifically developed to support Ireland’s best tech companies to grow from ideation to global players. The team advising some of the world’s top tech companies will be the same team advising companies on our programme, bringing unparalleled insight and support.

We know that in the early stages of a company’s life cycle, cash management is key, but this is also the point in time where proper documentation and implementation of key programs are crucial to build a strong foundation for the company to grow from. In order to ensure founders are starting out on the strongest possible footing from day one, we have a range of key documents available, including founder shareholder agreements, ESOP option plans, employment agreements, IP documents, consultancy agreements as well as data protection packs, offered on a low-cost, fixed-fee basis.

Also, unique within the Irish market, we offer company organisational and secretarial services on demand with monthly subscription billing, which includes such services as capitalisation table management, statutory register maintenance, annual compliance as well as filings.

We have provided Irish legal advice to US corporates for decades. As the first Irish law firm to open a US office (in 1979), our US offices have been at the forefront in advising US clients on some of the most high-profile, innovative and complex transactions involving Ireland and the US.

Through our New York, San Francisco and Palo Alto offices, we advise US corporations, financial institutions, investment banks and private equity firms on Irish law. We regularly partner with the best law firms in the US to deliver advice to our US clients.

The UK market has been an integral part of our business for many decades, and so we have longstanding working relationships across the UK business and legal community. This is based on many years of providing Irish law advice on some of the most significant and complex transactions involving Irish, UK and international corporations. Our London office is an important part of our relationship with the UK and international business community. Through this office, we also advise Irish corporates who are doing business in the UK by leading and project managing the process, also working closely with local lawyers and other advisers.

Our Belfast office, now one of the largest legal practices in Northern Ireland, services a broad range of clients across all sectors and practice areas. Due to the very close commercial ties between Ireland and Northern Ireland, Belfast is critical in our firm, providing an all-island offering to our many cross-border clients.

More generally, as an independent Irish firm, we continue to work with leading international law firms seeking to access leading talent and services in the Irish market on a case-by-case basis.

The Screening of Third Country Transactions Bill 2022 (SofTCT) has been published and, once enacted, will introduce Ireland’s first domestic screening regime for FDI in Ireland by parties established in third countries. The SofTCT is partly in response to the EU Investment Screening Regulation, as well as concerns by EU Member States regarding the purchase of strategic EU companies and interests by non-EEA owned businesses and individuals. Crucially, the UK will be a third country for the purposes of the SofTCT, which is significant, given the level of investment by UK PE sponsors in Ireland.

The Bill will allow the Minister for Enterprise, Trade and Employment (Minister) to scrutinise a wide range of transactions involving a non-EU/EEA/Swiss undertaking (person, company or other entity) and relating to the control of Irish businesses and assets in key sectors, including critical technology and infrastructure. Certain deals will be subject to mandatory notification obligations for prior approval of triggered transactions with significant sanctions for failure to comply (including fines of up to €4m). The Minister will also have the right to call in other deals for review, and can block or impose conditions on deals.

The proposed 90-day ministerial review period is significantly longer than the current 30-day domestic competition review period. The potential for such a long period between signing and completion of a transaction is likely to lead buyers to seek increased gap protection provisions.

As currently proposed, deals will be aggregated, as notification of a below-threshold transaction will be required where: “the cumulative value of the transaction and each transaction between the parties to the transaction, or persons connected with third country undertakings that are parties to the transaction, in the period of 12 months before the date of the transaction is equal to or greater than [€2m]”.

However, a recent proposed amendment does carve out any transactions where the same undertaking controls, directly or indirectly, all parties to the transaction, pulling intra-group transactions out of the scope of the regulation.

The SofTCT is currently progressing through the Irish legislative process and, once completed, will need to be officially enacted and formally commenced.

Ireland remains a business-friendly and progressive jurisdiction for international businesses seeking to access the Irish market and/or looking to access EU and other markets from Ireland (or through Irish structures). A&L Goodbody has remained at the forefront of Ireland’s corporate offering over many decades, and our strategy is to continue to do so.