Investing in business
- Mergers and acquisitions in Central and Eastern Europe (CEE) fell in 2021, but remain at the highest level ever recorded by Mergermarket
- The number of transactions in the region was 846
- Total value of M&A activity reached 39.2 billion
- Despite global challenges, Central and Eastern Europe has solid foundations and should remain attractive to international investors in 2023
March 02, 2023: A Mazars, an international auditing, tax and consulting firm, has released the study Investing in Central and Eastern Europe: Inbound M&A report 2022/2023, The report, published in association with Mergermarket, reveals that investors in Central and Eastern Europe have adapted quickly to the tougher environment that emerged in 2022, despite unprecedented regional and global adversity. The report provides an overview of M&A activity in the region in 2022 and analyzes the challenges and opportunities for investing in the coming months.
For Celso Fernandes, Financial Advisory Director at Mazars in Portugal, “despite the challenges for M&A activity in 2023, given the existence of liquidity, operations will tend to be more selective, directed towards targets (i) capable of maintaining levels of cash-flows stable, (ii) able to preserve profitability despite the effects of inflation and (iii) with less exposure to debt.”
In total, these countries recorded 846 transactions worth 39.2 billion euros. Although these figures represent drops for the region compared to the same period last year - compared to 2021, the volume and value disclosed fell by 5% and 21%, respectively - there are two key elements to bear in mind.
Firstly, 2021 was always going to be a difficult year to beat, or even match, thanks to the low interest rates at the time and the surge in business in the aftermath of the pandemic. The number of transactions recorded in 2022, although down, is nevertheless higher than in any other year except 2021. The aggregate value of these transactions is also higher than any annual total, with the exception of the one recorded in 2021, surpassing the 38.6 billion euros reached in 2016.
Secondly, the region was not the only one to face adverse conditions when it came to mergers and acquisitions - all geographies, without exception, were affected. It should be noted that the year-on-year reduction in volume and value recorded in Central and Eastern Europe was considerably less pronounced than that observed worldwide. In fact, the advanced economies of Western Europe and North America suffered sharper annual losses.
The CEE region also continued to demonstrate high attractiveness for international investment. The overall proportion of M&A transactions involving cross-border players rose to 64% in 2022, an increase of four percentage points on the previous year and the highest proportion of recent filings since 2015.
At the same time, in the context of private equity, In 2022, activity slowed after the record number of deals in 2021, with the volume of acquisitions falling by 31%. The value showed an even sharper drop, 66%, with acquisitions totaling 3.4 billion euros in 2022, compared to 9.9 billion euros the previous year.
Despite this, the volume of acquisitions in 2022 remained remarkably positive by historical standards. The number of acquisitions of private equity in 2022 remains one of the highest ever recorded for Central and Eastern Europe, with a total of 97 deals, easily eclipsing any annual total between 2015 and 2020.
Looking ahead, Michel Kiviatkowski, CEE Financial Advisory Leader and Managing Partner of Mazars in Poland, concludes: “2023 will certainly be a challenging year. But we are counting on the quality of companies, the creativity of investors and continued support for the Recovery and Resilience Plan, which is worth more than 100 billion euros to the 12 countries located in this region that are members of the EU. This fact, as well as the region's solid foundations, suggests that there are good reasons to be relatively optimistic.”
Other important conclusions of the report include:
- Relevant regional locations. The top four countries for the volume of mergers and acquisitions in the region in 2022 were Poland (with 235 deals), Austria (120), Czechia (81) and Romania (76). In terms of aggregate value of deals, Poland and Austria also took the top two places, followed by Hungary and Croatia.
- Technology is still the protagonist. Technology stands out as the main generator, in terms of volume, of deals in the region involving external players in 2022. Although the number of deals registered (108) is down 13% on the exceptional levels reached in 2021 (124), it is still one of the highest annual totals for the technology sector, with the closest being the 60 transactions registered in 2020.
- Shortening the difference in value. The median EV/EBITDA multiple for the region, across all sectors, was 8.5x in 2021-22, as Mergermarket data shows. This is only marginally lower than the median multiple for Western Europe, which was 8.9x for the same period. The convergence is significant. The data shows that the median multiple for these countries has increased (0.7x compared to 7.8x in 2019-20), while the Western European multiple has fallen (1.8x compared to 10.7x in 2019-20).
About Mazars
Mazars is a partnership an integrated international firm specializing in auditing, accounting, consulting, tax and legal services*. Operating in approximately 100 countries and territories around the world, we draw on the expertise of more than 47,000 professionals - 30,000+ in the partnership Mazars and 17,000+ through the Mazars North America Alliance - to support clients of all sizes in all industries. steps of its development.
*when permitted by local legislation.
In Portugal, Mazars is present in 3 cities (Lisbon, Porto and Leiria) and has more than 230 professionals.
https://www.mazars.pt | https://www.linkedin.com/company/mazars-portugal |
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About Mergermarket
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