Latest stats from the irish Mergers and Acquisitions market

1. BDO Mergers & AcquisitiOns survey
2011
Audit  Tax  Advisory

2. 2 BDO Mergers & Acquisitions Survey
cOntents
– Research methodology 3
– Foreword 4
1 Growth expectations 5
2 M&A levels 6
3 Barriers to M&A 10
4 Use of advisers 12
5 Businesses with no plans for M&A activity 13

3. BDO Mergers & Acquisitions Survey 3
reseArcH MetHODOLOgy
n During the first quarter of 2011, 85 interviews were carried out with senior n Representatives of companies from both the Republic of Ireland and
decision-makers involved in corporate strategy within Ireland's top 1000 Northern Ireland were interviewed.
companies and Northern Ireland's top 250. All respondents were either FD/
CFO, MD/CEO or M&A/development/investment directors. n Both BDO clients and non-clients were approached to take part in the
research. The survey was managed by BDO with the fieldwork for non-BDO
n Companies were selected across a spread of business sectors, including: clients conducted by Behaviour & Attitudes.
distribution (18 per cent), food (10 per cent), technology, media & telecoms
(18 per cent), energy (16 per cent), others (38 per cent).
n Companies represented a spread of turnover:
Up to €50 million 27%
€51-€100 million 25%
€101-€250 million 20%
Above €250 million 15%
Would not give turnover information 13%

4. 4 BDO Mergers & Acquisitions Survey
fOrewOrD
Despite tHe DOwnturn in tHe ecOnOMy, tHere HAs Been A resurgence Of cOnfiDence tOwArDs Mergers & AcquisitiOns.
grOwtH is AgAin On tHe AgenDA, witH sOMe cOMpAnies setting tHeMseLves AMBitiOus tArgets.
40 per cent of the companies we spoke to anticipate improvements in M&A
Katharine Byrne
opportunities over the next 12 months, but there are still some significant
Partner
challenges. In particular, the expectation gap between buyers and sellers was
kbyrne@bdo.ie
noted as a barrier for 52 per cent of respondents while 35 per cent find it
+ 353 1 470 0515
difficult to identify the opportunities. The expectation for raising bank debt is
also a concern for 42 per cent of respondents however 60 per cent of those
planning an acquisition intend to finance out of existing reserves.
After more than a decade of high growth and low inflation the economy hit
the rocks at the end of 2008. Since then business leaders have been grappling It is our view that the outlook for M&A over the next 12 months will be driven
with the recession by cutting costs, reducing leverage and streamlining their by companies adapting to the new business landscape, as business leaders
operations. and their advisers seek innovative ways of doing deals in order to achieve
growth. While funding is likely to remain challenging, the strategic buyers
With the current economic conditions making organic growth difficult, with low leverage will find themselves best placed to achieve their acquisition
companies are now focussed on growing through acquisition. So it’s objectives.
encouraging to see that 56 per cent of the companies we surveyed are now
looking to make an acquisition this year, with 67 per cent over the next 5 I hope you find this survey useful and welcome your feedback. [If you would
years. The majority of these acquisitions are targeting gains in market share like to contribute to future surveys please let us know.]
or improved product offerings. Whilst many companies are contemplating
<€20m acquisitions, 15% have their sights on larger +€20m transformational
transactions.

5. BDO Mergers & Acquisitions Survey 5
grOwtH MOst cOMpAnies pLAn grOwtH Over tHe next tHree
expectAtiOns
yeArs AnD MAny HAve AMBitiOus tArgets.
we AskeD What annual turnover growth targets does your business have for the next
three years? (Base: 85)
Zero 14%
1-5% 28%
6-10% 25%
11-25% 20%
1
26%+ 13%
Growth targeted per annum: average 14.46%
Sector split Average growth targets
Distribution 11.1%
Food 10.9%
TMT 28.6%
Energy 10.3%

6. 6 BDO Mergers & Acquisitions Survey
M&A LeveLs AcquisitiOns Are pArt Of tHe cOrpOrAte strAtegy fOr ABOut
twO in tHree cOMpAnies.
we AskeD Do acquisitions form part of your corporate strategy in the next (a) year? (b) two
to five years? If no to both: Would you still consider opportunistic acquisitions?
(Base: 85)
All companies 56% 11% 13% 9%
Under 250 staff 41% 23% 23% 9%
Over 250 staff 71% 12% 6% 12%
2
Next year
In two to five years only
Consider opportunistic acquisitions
Not interested
<€20m
Among acquisitive companies, 67% foresee
just a single transaction in the coming year. Most are
looking at a value of less than €20 million.

7. BDO Mergers & Acquisitions Survey 7
67%
cOMpAnies surveyeD cOnsiDereD On AverAge five trAnsActiOns AnD cOMpLeteD
twO in tHe LAst 24 MOntHs.
we AskeD How many transactions (mergers or acquisitions) we AskeD How many transactions (mergers or acquisitions)
has your business completed in the last 24 months? did your business consider in the last 24 months
(Base: 57) (including those completed)? (Base: 57)
of companies are planning acquisitions
Zero 27% Zero 4% in the next five years.
One 31% One 13%
Two 13% Two 11%
Three 15% Three 53%
Four 2% Four
Five 5% Five 9%
6 � 10 4%
6 � 10 4%
>10 6%
>10 4% Considered: Average 5.44
Completed: Average 2.42
tHe next 12 MOntHs: A MAjOrity Of cOMpAnies Are pLAnning AcquisitiOns.
we AskeD How many companies will you be looking to acquire in the next 12 months? (Base: 48)
One 46% Depends on circumstances 4%
Two 17% Don't know 23%
Three 6% None 3%
More than three 2%

8. 8 BDO Mergers & Acquisitions Survey
MOst DeALs LikeLy tO Be unDer €20M, But neArLy One in six LOOking At €20M+.
we AskeD What size of deal would you consider looking at? (Base: 48)
Less than €5 million 38%
€5-€20 million 29%
€20-€50 million 13%
Over €50 million 2%
Don't know 19%
Acquisitive cOMpAnies Are HOping tO AcHieve furtHer increAseD prODuct
Offering, increAseD MArket sHAre AnD geOgrApHicAL integrAtiOn.
we AskeD Q1. What has been the principal strategic objective of the transactions your business has considered or completed? (Base: 57)
Q2. What will you be looking to achieve through M&A in the next 12 months? (Base: 48)
4% Main target territories
Horizontal integration
31% for international expansion (Base: 18 companies)
Continental Europe 89%
4%
Vertical integration UK 83%
31%
Middle East 39%
23%
Geographical integration into new international markets North America 33%
38%
Eastern Europe and Russia 22%
34%
Increased market share in existing market Asia/Pacific 22%
58%
Africa 22%
30% South America 17%
Increased product/service offering
63% India 11%
Other 11%
Q1 Q2

9. BDO Mergers & Acquisitions Survey 9
56%
MOst Acquirers funDeD AcquisitiOns tHrOugH
existing cAsH reserves AnD BAnk fAciLities.
we AskeD In the past 24 months, how has your business funded its acquisitions? (Base: 57)
Existing cash reserves 51%
say they would contemplate troubled
Existing bank facilities 23% companies, with smaller companies
(both in turnover and staff numbers)
New bank facilities 15%
being more likely to do this.
Equity injection 13%
Non-cash acquisition 9%
Other 2%
Did not complete acquisition 19%
funDing wiLL Be frOM existing cAsH AnD DeBt
fAciLities, AnD MAny wiLL seek new funDing.
we AskeD In the next 12 months, how do you plan to fund acquisitions (if any)? (Base: 48)
Existing reserves 60%
New bank debt 29%
Private equity backing 29%
Additional support from existing shareholders 25%
Existing bank debt facility 25%
Share issues privately 17%
Share issues on capital markets 4%

10. 10 BDO Mergers & Acquisitions Survey
BArriers tO M&A cOMpAnies BeLieve tHere wiLL Be An iMprOveMent in M&A
OppOrtunities in tHe next 12 MOntHs, ALtHOugH sOMe
finD iDentifying tArgets cHALLenging.
we AskeD Looking at M&A opportunities for your business in the next 12 months, would
you forecast there to be an overall (Base: 48):
Improvement 44%
Deterioration 4%
No change 35%
Don’t know 17%
3
we AskeD How easy do you find it to identify suitable acquisition targets? (Base: 57)
Relatively easy 19%
Usually achievable 23%
Challenging 40%
Don’t know 18%

11. BDO Mergers & Acquisitions Survey 11
tHe HigH expectAtiOn gAp Between venDOrs AnD Buyers is tHe MAin BArrier tO
cOrpOrAte M&A Activity, But finAncing AnD A reDuceD nuMBer Of OppOrtunities
Are ALsO significAnt issues.
we AskeD In the next 12 months, which of the following barriers, if any, do you expect your business to face in its corporate M&A
activity? In addition, do you think these will represent either a major, somewhat or no barrier at all. (Base: 48)
High expectation gap between vendors and buyers 52%
36% 64%
Reduced ability to raise bank debt 42%
60% 33% 7%
Reduced ability to raise equity to finance acquisition 35%
73% 9% 18%
Reduced number of opportunities in our market 35%
71% 24% 6%
Insufficient management time 31%
25% 75%
Longer M&A process and negotiations 23%
53% 35% 12%
Major barrier Some barrier No barrier/Don’t know
11×
more companies envisage an improvement rather than
a deterioration in opportunities in the next 12 months.

12. 12 BDO Mergers & Acquisitions Survey
use Of ADvisers twO-tHirDs wiLL LOOk tO ADvisers tO sOurce DeALs.
neArLy ALL ADviser users sAy tHAt inDepenDent ADvisers
HAve ADDeD vALue tO tHe prOcess.
we AskeD Where will you be looking to source your deals from? (Base: 57)
In-house 70%
Advisers 40%
Other 18%
4
we AskeD Have you ever used an independent adviser to source a deal or during the course of a
transaction – 67% said yes. We then asked those who answered yes: to what extent do
you believe (advisers) added value to the process? (Base: 57)
A great deal 28%
To some extent 48%
A little 23%
Not at all 0%
Don't know 1%

13. BDO Mergers & Acquisitions Survey 13
Businesses witH AttituDe tO OppOrtunistic AcquisitiOn.
nO pLAns fOr we AskeD As acquisitions do not form part of your growth strategy would you still consider
opportunistic acquisitions? (Base: 28)
M&A Activity Yes
No
Don't know
39%
29%
32%
5
reAsOns fOr reticence.
we AskeD Why are you currently not pursuing any acquisitions? (Base: 28)
We don’t see the need to/prefer to focus on ourselves 29%
We don’t have the finance/funding 25%
We have never come across anything suitable 7%
Our shareholders want us to focus on sales 4%
We are pursuing an opportunistic acquisition but its
4%
not part of our fundamental strategy

14. 14 BDO Mergers & Acquisitions Survey
key AreAs Of Business tHAt require iMprOveMent in OrDer tO reAcH strAtegic gOALs.
we AskeD What key areas of your business do you feel require improvement in order for you to reach your strategic goals? (Base: 28)
Improve sales/marketing 21%
Growth of the business (non-specific) 7%
Improve quality for customers 7%
Acquire more funding 7%
Improve revenue management techniques 7%
Be more efficient 7%
State of the economy 7%
Manage our supplier margin expectations 4%
HR function needs to develop 4%
Size of our workforce (need additional staff) 4%
Finding new ways of growing 4%
Maintaining costs 4%
Don't know/nothing/refused 46%
MAin strAtegic gOALs fOr next five yeArs. cHALLenge tO AcHieving gOALs.
we AskeD What are your principle strategic goals for the next two to five years? (Base: 28) we AskeD What do you see as the key challenges you face in achieving your goals across this
period? (Base: 28)
Continue to grow/expand 32%
Increase market share 18% Competition 29%
Develop new business opportunities 18% Current economic climate 21%
Maintain profitability 14% Maintaining sales/customer base 18%
Be more cost effective 7% Lack of good/skilled staff available 11%
Enhance service 7% Currency fluctuation 11%
Increase turnover 4% Availability of finance/funding 11%
Grow in overseas regions 4% Labour costs 7%
Reduce exposure in mature markets 4% Huge growth in overseas markets 4%
Expand client base 4% Mergers in the industry 4%
Get more staff 4% Managing our rapid growth 4% Regulations in the market 4%
Combine offices 4% Managing our assets 4% Enhancing our credibility 4%
Ultimately dispose of business in two to five years 4% Rising rents 4% Threat of terrorism (for travel) 4%
Stabilise the company 4% Determining if opportunities are viable 4% Maintaining profitability 4%
Not answered 32%

15. BDO Mergers & Acquisitions Survey 15
nOtes
cOrpOrAte finAnce
& recOvery teAM
BDO have an integrated corporate finance and recovery team which
provides a unique multi-discipline approach to protecting and maximising
stakeholder value. Our full service offering and ability to draw on our in-
house commercial and technical skills ensures a balanced and objective
approach to each assignment.
Within our team we have specialists who can help add value through their in-
depth knowledge of and direct experience with challenges, opportunities and
key players in the following areas:
– Mergers & acquisitions – Restructuring
– Sale of business – Examinership
– Management buy-outs – Receivership
– Transaction services – Liquidation
– Fundraising – Litigation/Forensics.
Dealing with us is different. Our approach is pragmatic and hands-on
which ensures timely, straightforward advice and our deals are led by
senior personnel which delivers high value for clients through experienced
negotiation and quick and effective solutions to issues.
For more information please contact:
Katharine Byrne, Partner, on 01 470 0515 or kbyrne@bdo.ie

16. This publication has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The
publication cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information
contained therein without obtaining specific professional advice. Please contact BDO to discuss these matters in the context of your
particular circumstances. BDO, its partners, employees and agents do not accept or assume any liability or duty of care for any loss
arising from any action taken or not taken by anyone in reliance on the information in this publication or for any decision based on it.
BDO is authorised by the Institute of Chartered Accountants in Ireland to carry on investment business.
BDO, a partnership established under Irish Law, is a member of BDO International Limited, a UK company limited by guarantee,
and forms part of the international BDO network of independent members firms.
BDO is the brand name for the BDO International network and for each of the BDO Member Firms.
www.bdo.ie © BDO IRELAND 2011
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