IRELAND Trends and Developments Contributed by: Enda Garvey, Brian McCloskey and Robert Maloney Derham, Matheson LLP
From a tax structuring perspective, the availability of Ireland’s substantial shareholder exemption should be borne in mind by domestic investors that are within the Irish tax net in the context of minority investments. This relief from Irish capital gains tax on the disposal of shares only applies where a minimum 5% share - holding has been held for a specified holding period. Another key trend in “control deals” is the increased use of rollover equity structures, particularly where there is a valuation gap or where the founder/seller is looking to have exposure to a larger PE-backed plat - form, while at the same time being able to achieve a level of liquidity. Careful consideration should be given at the outset as to the potential tax consequences for a founder/seller when considering a rollover deal, as the nature of the buyer structure – both in terms of type of corporate entity and jurisdiction – can have very different tax outcomes for the founder/seller. Continuation Funds In a challenging macro-economic environment and a slower IPO market, continuation funds are increasing - ly being used as an effective exit strategy by financial sponsors, providing liquidity for limited partners with - out a traditional exit. Additionally, these continuation funds can provide limited partners with greater flex - ibility as they can, in certain circumstances, partially roll over their investment into the continuation vehicle, rather than fully cashing out. They also provide private equity sponsors with extended asset management. However, transactions involving continuation funds are complex and present challenges. Since the same private equity sponsor manages both funds, thorough diligence and independent valuation reports are cru - cial to ensure the asset is accurately valued and a well-negotiated deal is completed. Additionally, investors must engage separate legal teams to manage potential conflicts of interest and ensure negotiations are conducted on an arm’s length basis. While continuation funds have not to date been a meaningful feature of the Irish M&A market, we are seeing increased engagement with financial sponsors
on the potential use of continuation funds for their Irish assets. Increased Strategic Importance of ESG Considerations in M&A Across Europe, including in Ireland, the importance of ESG factors has increased across all sectors in recent years as regulators seek to hold investors and indeed all companies to a higher standard. ESG considerations are now commonly an area of focus in private equity transactions and frequently form part of the due diligence process, where previ - ously they were considered at a much later stage, if at all. Increasingly, private equity investors are utilis - ing their individual portfolio companies to contribute towards and achieve their overall ESG targets. This is reflected not only in increased due diligence, but also in business plans agreed between investors and management. In terms of ESG regulations, most Irish ESG laws are derived from EU legislation. For example, Ire - land transposed the EU’s Corporate Sustainability Reporting Directive in July 2024 and new regulations to transpose the ‘stop the clock’ delay became law in July 2025. Private equity firms with larger portfolio companies are also considering the impact of the Corporate Sus - tainability Due Diligence Directive, which was also amended by the European Commission’s ‘Omnibus’ proposals, and will begin to apply to the largest com - panies in 2028. Under this new regime, in-scope com - panies (and, indirectly, certain of their customers and suppliers) will be required to incorporate sustainability due diligence into their operations and strategy. In terms of Irish-specific ESG legislation, portfolio companies and sponsors should be aware that Ire - land has specific gender pay gap reporting, which is separate from and in addition to the EU’s Pay Trans - parency Directive. Foreign Direct Investment/Foreign Subsidies Regulation Inward investment and attracting foreign direct invest - ment (FDI) into Ireland has been (and will remain) a key
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