Just 11% of businesses are considering engaging in a merger or acquisition in the next 12 months, new data shows.
Despite growth in the domestic economy, the report by global professional services firm Aon highlights the challenges facing businesses - from a tight labour market, to rising operating costs and increasing levels of cyber-attacks.
"Aon's latest M&A in Ireland Report shows that these challenges are creating uncertainty among businesses, with almost 90% of businesses either less likely or unsure of whether they will engage in M&A activity in the coming year," said Karl Curran, Head of M&A and Transaction Solutions at Aon Ireland.
However, the data shows that there is stronger appetite for M&A activity in certain sectors.
26% of Irish businesses in the technology, media, and telecom sector are considering M&A activity, followed by 17% of firms in the financial and professional services sector.
Over 30% of companies said accessing skilled talent was their top reason for considering the move.
Expansion into new jurisdictions was the top motivator for businesses in the tech, media and telecom sector, while expansion into new business areas was a key driver for financial and professional services firms.
The report shows that over 60% of Irish businesses consider cyber security and technology risks before concluding an M&A deal, yet only 35% consider ESG standards pre-transaction.
"According to the 2023 Aon Cyber Resilience Report, major cyber incidents typically result in a 9% decrease in shareholder value for businesses in the 12 months following an attack," said Mr Curran of Aon Ireland.
"In this context, we welcome the findings from today's report that more firms in Ireland are prioritising cyber risk as part of M&A due diligence.
"However, with a significant number of businesses still not screening for cyber risk at all, many firms need to urgently put these capabilities in place," he added.
Today's research reveals that 62% of companies that engaged in M&A over the past year said the deals had achieved their strategic objectives.
