Northern Ireland – an international opportunity

February 2022

Much has been written about the UK and Brexit. However, while Great Britain seems to be moving ahead in a post-Brexit world, Northern Ireland is having to adapt and change to a different post-Brexit (and post-pandemic) trading environment. But this article is not about historical or political differences; it is about a shared future for Northern Ireland – a future inside both the United Kingdom and the EU single market.

Northern Ireland is home to many global success stories. It is also renowned for the excellence of its education – Queen’s University Belfast and Ulster University highlight the quality and quantity of well-educated staff available to global companies seeking to grow a strategic base in Northern Ireland. During the last twenty years, large businesses such as Citibank, Allstate, and CME Group have all established operations in Belfast. However, SMEs are now also looking to base themselves in Northern Ireland to take advantage of the high-quality skills and lower costs available in the region.

As, traditionally, a ship building city, Belfast has faced many challenges in recent times. However, a new renewable industry is growing rapidly as local companies turn to manufacturing offshore wind turbines, expanding their global offering to meet an ever-increasing world-wide demand. There are also examples of new technologies resulting in new research and development companies forming to explore energy efficient ways of reducing pollution in the shipping industry.

Northern Ireland is home to many innovative companies leading the way in new markets and sectors, developing the technology of the future, helped by the availability of a highly skilled workforce that is used to working on large-scale projects and products. Yet, Northern Ireland is unquestionably underdeveloped in terms of mergers and acquisitions; thus, there are significant opportunities for overseas companies to acquire owner-managed and established family businesses in Northern Ireland.

This trend is already well-established in the financial, legal and technology sectors. But there is a wider opportunity, driven by Northern Ireland’s unique position of being simultaneously inside the UK and the EU single market (for the sale of goods). Overseas companies seeking access to both markets will find that Northern Ireland can trade freely with either. Add to this a continually growing population of young, skilled, and educated people and Belfast provides the perfect base for long-term growth.

During the pandemic, and since the Brexit deal was announced, we have witnessed several international companies using Northern Ireland as a base for growth by establishing joint ventures and forming new companies. However, much more is still achievable given Northern Ireland provides businesses with an immediate and well-established distribution footprint in both the UK and the EU.

Northern Ireland offers a unique proposition: a growing, well-trained workforce and a pipeline of highly educated students graduating every year from local universities. International businesses will discover that the region’s cost-effective base and attractive growth story will excite both boards and shareholders alike.

For those businesses looking to invest in Northern Ireland, the importance of meticulous planning and having deal-ready businesses – those with strong growth prospects and an experienced management team – cannot be over stressed. A key component of any transaction is creating a comprehensive and robust Heads of Terms before starting due diligence and instructing lawyers. Next, ensuring the deal is as tax effective as possible (which necessitates fully integrated tax, legal and financial advice) together with prompt liaison with lawyers is vital. Finally, it’s essential to anticipate early on any factors which may be used in price negotiations.

While there are many opportunities in Northern Ireland for ambitious companies looking to exploit them, the local mergers-and-acquisitions market remains largely undeveloped. However, there is local expertise available, and several international businesses have already seen the value and reaped the benefits of this. Appointing local and professional advisers at the outset will help to avoid problems and pitfalls later.

Belfast – a top-10 tech city of the future

Northern Ireland has very quickly become a top location for businesses, especially fintech businesses – around 40,000 people in Northern Ireland work in financial and professional services. Indeed, Belfast is seen as a fintech centre of excellence, a fact recognised in the inaugural report Tech Cities of the Future 2020/21.

The report focused on European cities with the most promising prospects for start-ups, tech, and innovation investment. Belfast ranked ninth, behind only London in the UK and ahead of illustrious cities such as Madrid, Frankfurt, Zurich, and Milan.

Andrew Jenkins, the UK Government’s Fintech Envoy for Northern Ireland, had this to say:

“Confirmation that Belfast has been ranked in the inaugural top 10 ‘Tech Cities of the Future’ for 2021/2021 by fDi Intelligence is another significant endorsement of the burgeoning tech sector in Belfast and indeed Northern Ireland as a whole. To be ranked above world-leading financial hubs such as Frankfurt and Zurich are testament to this.

There are many reasons why Belfast is fast becoming a world-beating tech destination and prime investment material. The resiliency, adaptability, and innovation at the heart of the sector here along with the talent on offer is continually noted by those global businesses who have already invested here. Despite the challenges posed by Coronavirus, there is an energy and drive about the sector, and it is important that we harness this energy as we move forward.”

Belfast’s ranking is reward for its success in attracting global fintech names such as Citi, Allstate, Liberty Mutual, and First Derivatives. Belfast also boasts a thriving start-up and SME tech community.

The fintech industry also benefits from Northern Ireland’s unique political position. As part of the UK, Northern Ireland operates within the UK’s robust financial services regulatory framework. As part of the island of Ireland, it also has access to the European and Irish financial services markets.

About the author

John Hannaway
Belfast, United Kingdom

John is Company Principal at HCA Chartered Accountants, the Belfast, UK member firm of Russell Bedford International.

A Big Four partner for 25 years, John is a former Ulster Society chairman and past president of Chartered Accountants Ireland (CAI).

John specialises in providing strategic, financial and taxation advice to owner managed and entrepreneurial businesses. He is passionate about providing professional, practical and personal financial advice to businesses with a growth mindset.

Author: John Hannaway - HCA Chartered Accountants, Belfast, United Kingdom

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