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‘Vertical integration’ answer to supply chain dislocation

A report from Eversheds Sutherland shows that over two-thirds (69%) Irish business leaders view “talent, technology, and trade” as core to their future M&A business strategy.

A full 71% of Irish business leaders (72% globally) see talent retention and acquisition as important over the next year.

And 64% of Irish business leaders (and 62% globally) believe the ‘Great Resignation’ is acting as a catalyst for M&A as the battle for talent continues.

An increasing trend of ‘acqui-hiring’ – acquiring a company specifically to access its employees is visible, with two-thirds (64%) of life sciences leaders believing talent acquisition and retention will be an important factor in their M&A activity next year, closely followed by those in the professional services (63%) and energy (63%) sectors.

Technology continues to drive organisations’ business strategies, with 76% of Irish business leaders (almost 80% globally) seeking to improve their cyber security, and three-quarters seeking digital transformation.

Globally, M&A is seen as a rapid way to absorb new technology and expertise, with 74% saying M&A was important in bridging technology gaps.

The global Eversheds Sutherland study finds that business leaders are contending with inflation, rapid innovation, market volatility and supply issues.

The research was conducted in early 2022 among 1,200 business leaders across 16 markets around the world including Ireland. 

Supplementary research gave insight into how the ongoing invasion of Ukraine is impacting M&A activity.

Given supply chain disruption and trade sanctions, 73% of Irish business leaders (68% globally) say that increasing supply chain resilience will be a strategic M&A priority over the next year.

Supply chain resilience

And 69% of Irish business leaders (72% globally) also see increasing supply chain resilience as important to their organisation’s business strategy over the next year.

In April 2022, 60% of global business leaders said vertical integration would become an increasingly important business strategy, given supply chain dislocation because of the invasion of Ukraine.

And 68% of business leaders indicate that increasing supply chain resilience will be a strategic M&A priority over the next year.

Corporate partner Enda Newton said that a turbulent period in the wider business landscape had affected the M&A environment.

“Our research revealed that the majority of Irish business leaders see talent, technology and trade as the main factors impacting the M&A landscape – these are the key strategic gaps that they will continue to seek to bridge through mergers and acquisitions activity.” 

In April 2022, 90% of business leaders said that the ongoing war in Ukraine and its associated effects are causing deals to be stopped or postponed to some extent – with one in five (21%) claiming that their organization is postponing all M&A activity.

Two-thirds (66%) of business leaders believe the rise of protectionism is creating an unstable environment for M&A – rising to 70% in the energy sector. 

Strong headwinds

Over two-thirds (68%) of Irish business leaders agree that the rise of protectionism is now creating a more complex environment for M&A and, globally, 67% believe that protectionism is making exposure to growth markets more difficult.

And 74% of those surveyed agreed that the ongoing invasion of Ukraine is harming M&A activity owing to the direct impact of sanctions. In addition, 70% of organisations acknowledge that the ongoing virus uncertainty is still a significant challenge.