Staff shortages are driving more than a quarter of companies to consider a sell-off or acquisition

More than a quarter of companies considering an acquisition or divestiture are motivated by staff shortages.

While only 18 per cent of Irish companies would consider a merger or acquisition (M&A) in the next one to two years, 28 per cent would do so to find labour, a survey by consultancy Aon has found.

According to the survey, this was the third most important reason to engage in M&A activity, after the desire to increase “business efficiency” and protect and grow market share.

Corporate CEOs are increasingly focusing on “human capital” when considering a potential transaction, with 38pc saying it is a top focus area for “due diligence” – second only to finance.

Unemployment and job vacancy rates are at record lows here, and many companies are struggling to fill jobs despite offering higher wages and more benefits.

The job vacancy rate in the professional, scientific and technical sectors in the second quarter was almost three times the national average of 1.6 percent, data from the Central Statistical Office shows.

Job openings in finance, insurance and real estate companies were about double the average.

But a separate survey by recruiting expert Manpower, also released today, found employers — particularly tech companies — plan to significantly slow hiring later this year.

A more cautious stance among Irish companies comes after a record year for Irish M&A in 2021

Aon Ireland’s M&A report shows that Irish companies are becoming increasingly reluctant to make M&A decisions, with 70 per cent saying they ‘don’t know’ if they will engage in any activity in the next two years.

Just 7 percent say they are “more likely” to engage in M&A activity in the next six months, rising to 11 percent for the next 12 to 24 months.

Globally, 68 percent of companies expect the number of M&A deals to increase in the next 12 months.

The more cautious stance from Irish companies comes after a record year for Irish M&A in 2021 with a combined value of over €24 billion.

This year has also started well, with tech unicorn Wayflyer, Cork-based fintech Global Shares and property firm Hibernia REIT among the biggest deals of 2022 so far.

But rising inflation is now the biggest risk for 69% of Irish companies considering M&A activity, with high valuations a problem for 45% and a lack of “sustainable investment options” a problem for 43%.

The current geopolitical environment was a risk for 39 percent of the 290 companies surveyed.

“As the world began to recover from the global Covid-19 pandemic and 2021 marked a stellar year for global M&A activity, the landscape for M&A has changed yet again,” said Karl Curran, Head of M&A at Aon Ireland.

“The invasion of Ukraine has created geopolitical tensions and the economic impact is already being felt around the world.”

https://www.independent.ie/business/irish/staff-shortages-driving-more-than-a-quarter-of-firms-mulling-a-sell-off-or-buyout-41983694.html Staff shortages are driving more than a quarter of companies to consider a sell-off or acquisition

Fry Electronics Team

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