The first six months of 2004 has seen a dramatic increase in the level of overseas acquisition activity by Irish firms.

More than €3 billion worth of assets were acquired, almost three times the value of overseas acquisitions in either of the last two half-year periods. This is the first set of figures that clearly points to Ireland being a major net accumulator of corporate assets.

Details from Ion Equity's M&A Tracker survey for the first half of the year show that Irish companies were involved in more than €4.7 billion worth of acquisitions, disposals, management buyouts and trade sales.

The actual number of transactions involving Irish companies increased year-on-year from 88 to 115 in the first half, and the large increase in the disclosed value of the transactions is mostly due to a small number of very large acquisitions.

The biggest single transaction was Quinlan Private's €1 billion acquisition of the Savoy Hotel in the UK while CRH (c. €700 million), Kerry Group (c. €600 million) and Tullow Oil (c. €470 million) were each involved in major buying sprees.

The only large deal involving the sale of Irish assets was the acquisition of Clondalkin Group by private equity firm Warburg Pincus for €630 million.

We are very big acquirers in certain sectors like property, food and building materials. Acquisition activity in these sectors creates a contrast with other sectors.

Our financial sector, which has some very strong players, has been a net seller of assets in recent years.

Other sizeable Irish business activity, such as our utility sector, has been left behind despite in some instances being innovators for many years.

This hasn't been helped by hesitant Government stewardship.

In contrast, the Scots have been on a rampage in these sectors in recent times.

Ireland had been building some important technology businesses in the late 1990s but lost most of the survival battles in the downturn.

Government intervention through tax breaks seems opportune, as we are good at technology but don't have the history of massive subsidised research programmes enjoyed by other countries.

In terms of the number of deals, the most active sectors were food, industrial, support services, IT/telecoms and leisure/travel - the latter mostly involving the sale or acquisition of hotels. As with the bigger deals, most of the buyers were Irish, and in the case of smaller deals the main driver is either consolidation in the Irish market or the opportunistic acquisition of overseas assets, mainly in the UK.

In the technology sector, the sale of Eontec to Siebel for the very strong price of €108 million suggested to some that the days of rich returns from the technology sector are back.

But the Eontec deal is likely to be the exception rather than the rule in the short-term as there are only a handful of interesting technology companies worth significant money in Ireland today.

In previous periods, take-private deals have contributed significantly to the level of activity, but this trend has now slowed as many of the more obvious take-private's and management buyouts have already been completed.

The main MBO activity in the first half of 2004 was the €70 million buyout of the Caulfield Supervalu Group.

Looking ahead, although most of the underlying economic indicators are good, and financial buyers are finally getting a run for their money from corporate buyers, there is no consensus that we will have fair sailing in the medium-term.

The corporate climate has undoubtedly been hampered by international events.

Continuing instability in the Middle East has added to inflationary pressures and rising oil prices have hastened increases in interest rates.

While cheap money has enabled much of the acquisition activity in recent years - particularly in property deals - interest rate rises may begin to put pressure on very highly geared transactions.

Countering this, the US economy's signs of revival should generate a knock-on effect across the Atlantic, increasing confidence and supporting demand.

On the basis that general economic conditions for deal-making may wobble but will not worsen significantly, expect further acquisitions from canny Irish dealmakers at home and abroad, especially in the UK.

The number of deals will continue to rise in the short to medium term with further consolidation in support services, leisure and other sectors, but values will fluctuate depending on the timing of the bigger deals.

But businesses that fail to grow strongly will become targets with, for example, Irish financial institutions likely to face increasing pressure from more aggressive financial groups.

For Ireland it is strategically important that a reasonable proportion of our corporate assets are controlled by Irish management teams.

Political will to stick to long term economic goals will be tested by short-term pressures to appease and fudge.

A failure by some journalists to distinguish between mistakes and scandal can help fuel anti-business sentiment.

Ultimately bad or weak business decisions are bad for everybody.

The hope from the business community is that the resolve to create a sustainable business framework where strong ambitious business managers can be encouraged to push forward and create strong Irish companies is maintained.

We are in a good position to continue the current trend of being net asset acquirers rather than sellers and so improve our ability to determine the shape of future Irish business activity.

Neil O'Leary is chief executive of corporate finance firm Ion Equity