M&A appetite strong in CEE/SEE, say dealmakers

BY Fraser Tennant

Mergers & acquisitions (M&A) activity in Central, Eastern and South-Eastern Europe (CEE/SEE) is strong, with 98 percent of dealmakers in the region indicating they will continue to invest in the market, according to a new report from Mergermarket and Wolf Theiss.

The ‘Corporate Monitor’ report, which canvassed the opinions of 150 senior-level executives about their experiences and outlook on M&A in the CEE/SEE region, also includes in-depth analysis of macroeconomic developments and M&A trends in each CEE/SEE country.

The report found that M&A activity in CEE was lively in 2016 amid global economic uncertainty, with deal value reaching €38.3bn, up 62 percent from €23.6bn in 2015. Furthermore, in line with global trends, deal volume remained fairly even year-on-year, with 507 deals compared to 516 in 2015.

Additionally, the report found that: (i) Poland, Austria and the Czech Republic are seen as the most attractive markets for buyers; (ii) the leading driver for M&A in the region is a target’s intellectual property or technology suggesting that CEE is developing strong innovation; (iii) the main challenge for dealmakers in specific countries stems from the competitive bidding environment according to 51 of senior-level executives; and (iv) investors expect distressed opportunities to grow in 2017, which should be of particular interest to buyout firms.

“Firm GDP growth in most CEE countries has sparked investor confidence in the region,” says Sonja Caymaz, research editor at Remark, part of the Mergermarket Group. “There was strong appetite for TMT, real estate, consumer and energy targets, especially from private equity (PE) firms which led to a record value for PE deals in 2016 (103 deals worth a combined value of €11.3bn – the highest deal value for PE in the region ever recorded by Mergermarket). There is still plenty of room for digitalisation in consumer and manufacturing businesses, and the ability to grow strong local brands across borders. As elsewhere in Europe, inbound activity from China into the CEE region also doubled compared from 2015.”

Horst Ebhardt, head of the corporate and M&A group at Wolf Theiss, concluded: “CEE/SEE saw a very strong M&A market in 2016 and this trend is widely expected to continue in 2017 – despite uncertainty in assessing the policy approaches of the new US administration, the outcome of elections in France and Germany and the UK’s structuring of its exit from the European Union.”

Report: M&A SPOTLIGHT: CEE - WOLF THEISS Corporate Monitor FY 2016

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