Rising costs, as well as economic uncertainty, is also putting many firms off merger and acquisition deals, according to a new survey by professional services firm Aon.
Just 18% of businesses in Ireland are considering M&A activity in the next one to two years, Aon's M&A in Ireland report shows.
69% of companies surveyed said that rising inflation was the main risk for engaging in M&A activity.
The short-term outlook is even more stark, with just 7% of business leaders saying they are more likely to engage in M&A activity in the next six months, today's report also reveals.
The current geopolitical environment was also singled out as an area of concern, with 39% of respondents citing geopolitical unrest as a risk when it comes to engaging in M&A activity.
For those Irish organisations which are contemplating transactions, key drivers include a desire to increase business efficiencies (39%) and protecting and growing market share (33%).
Other key motivators include accessing skilled talent (28%) and strengthening ability to navigate current volatility (20%).
Karl Curran, Head of M&A and Transaction Solutions at Aon Ireland, said that just as the world began to recover from the Covid-19 global pandemic, spurring a stellar year for global M&A activity in 2021, the landscape for M&A has changed again.
"The invasion of Ukraine has raised geopolitical tensions and the economic impacts are already being felt around the world. Inflation is rising and central banks have either started to increase rates or have signalled their intention to do so, while stock markets have gone into reverse in anticipation of a recession," Mr Curran said.
