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Feb 21, 2022

Strong inbound dealmaking bodes well for mergers and acquisitions in Central and Eastern Europe (ECL) in 2022

M&A in the ECL region

M&A in the ECL region

  • The volume and value of transactions in Central and Eastern Europe (ECL) increase compared to 2021
  • The number of M&A transactions in the region rises 32% over the previous year
  • Total transaction value reaches €67.5 billion – the highest since 2016

Mazars, an international audit, tax and consulting firm, today publishes a new report jointly with Mergermarket, which reveals that the value of M&A deals in the ECL region is the highest in the last five years. Our research suggests that investors are less concerned about issues related to Covid-19, rising inflation and volatile energy markets, leading to a strong bias towards transactions. inbound – a promising start to 2022.

The report, Investing in CEE: Inbound M&A Report 2021/2022, gives us an overview of mergers and acquisitions activity inbound of the ECL region throughout 2021 and anticipates the challenges and opportunities for the coming months.

Transaction volume and value increased in 2021. The number of M&A transactions in the ECL region rose to 889 in 2021, an increase of 32% over the previous year. The total value of transactions also increased, totaling €67,5 billion. This represents a 41% increase compared to 2020 and is the highest number of transactions since 2016. Michel Kiviatkowski, CEE Financial Advisory Leader and Managing Partner of Mazars in Poland, comments: “Our study shows that while challenges remain, buyers are taking matters more calmly as they look to expand their business and build on the region's track record of sustained growth. The region has a diversified economy – from strong IT resources to a growing set of middle-class consumers, as well as high levels of natural resources – making ECL an attractive area for investment and expansion as companies look to overhaul their supply chains. supply after the constraints caused by the pandemic”.

ECL continues to be an attractive destination for international investors. There have been considerable increases in the volume and value of cross-border M&A transactions, with the value of transactions inbound (including Russia) up 36% to reach a total of €32,5 billion – the highest annual transaction value since 2016. Transaction volume was also significantly higher – a total of 371 M&A transactions inbound, representing a 34% increase over 2020 and the highest level of transactions by volume since 2015.

Another area worth mentioning was the private equity (PE) activity. Fueled by record financial reserves in domestic and international markets, overall deal value for PE acquisitions rose 63% to a total of €10,4bn – the highest level recorded since 2015. Volume also increased significantly, 46% with 130 deals in 2021 versus 70 in the previous year.

A key feature in the resurgence of PE activity has been the prominence of US-based funds. US bidders were involved in four of the top ten PE transactions, including the acquisition of a 71,76% stake in Austrian commercial property specialist CA Immobilien Anlagen AG by Starwood Capital Group for €4,3 billion – the biggest private equity deal of 2021.

Other key findings from the report include:

  • Four countries continue to dominate. The top four countries in terms of M&A turnover in 2021 were Poland (with a total of 192 deals), Russia (146), Austria (119) and the Czech Republic (86). These are the same four countries that ranked first by volume in 2020. As for total deal value, Russia ranked first with reported transactions totaling €20,4 billion, up 15% from 2020. Austria, Poland and the Czech Republic were in second, third and fourth place respectively. The Czech Republic stands out, with the total value of the deal almost quadrupling each year to €10,3 billion, largely due to the strength of a single technology deal.
  • Featured technology sector. Technology stands out as the biggest business generator inbound of the ECL region in 2021. The performance was astonishing, with the value almost quadrupling each year to €10,1 billion and the volume rising to 86%. This activity was driven by the trend towards accelerating digitalisation, as well as by the growth in demand for nearshoring of IT as a result of the Covid-19 pandemic.
  • High ratings on ECL. Merger market data shows that the median valuation multiple for the ECL region across all industries was 11x over the 2020-21 period, slightly ahead of Western Europe at 9,69x. One of the disadvantages of this climate of high valuations is that it can create unrealistic expectations on the part of sellers – particularly when family businesses are brought to market.

For Celso Fernandes, Financial Advisory Director of Mazars in Portugal “The reserve of cash and liquidity, the positive post-pandemic prospects, the demand for digital assets and the recovery of tourism will certainly be aspects that will boost M&A activity for 2022. ”

You can download the full report here: https://www.mazars.pt/Home/Insights/Publicacoes/Estudos-e-Pesquisas/Investir-na-ECL-Inbound-M-A-report-2021-2022

About Mazars

Mazars is a partnership international integrated, specializing in auditing, accounting, consultancy, taxation and legal services*. Operating in more than 90 countries and territories around the world, we draw on the expertise of more than 44.000 professionals – 28.000+ in the partnership and 16.000+ via the Mazars North America Alliance – to support customers of all sizes at every stage of their development. *when permitted by local law.

About Mergermarket

In M&A, information is the most valuable currency. Mergermarket, an Acuris company, reports business information 6 to 24 months before it becomes public knowledge, giving our subscribers a powerful competitive advantage. With the largest network of mergers and acquisitions journalists and analysts, Mergermarket offers the most comprehensive merger and acquisition analysis service available today. Our reporters are based in 67 locations across the Americas, Europe, Asia-Pacific, Middle East and Africa. Visit mergermarket.com

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