M&A in the ECL region
- The volume and value of transactions in Central and Eastern Europe (ECL) increased compared to 2021
- The number of M&A transactions in the region is up 32% on the previous year
- The total value of transactions reached €67.5 billion - the highest since 2016
Mazars, the international audit, tax and advisory firm, today publishes a new report in conjunction with Mergermarket, which reveals that the value of M&A deals in the ECL region is the highest it has been in 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 penchant for transactions inbound - a promising start for 2022.
The report, Investing in CEE: Inbound M&A Report 2021/2022gives 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.
The volume and value of transactions increased in 2021. The number of M&A transactions in the ECL region rose to 889 in 2021, an increase of 32% compared to the previous year. The total value of transactions also increased, totaling €67.5 billion. This represents an increase of 41% compared to 2020 and is the highest value 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 businesses and take advantage of the region's track record of sustained growth. The region has a diverse economy - from strong IT resources to a growing pool 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 reshape their supply chains 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 international M&A transactions, with the value of transactions inbound (including Russia) up 36%, reaching a total of €32.5 billion - the highest annual value of transactions since 2016. The volume of transactions was also significantly higher - a total of 371 M&A deals inboundThis represents an increase of 34% compared to 2020 and the highest level of transactions by volume since 2015.
Another area worth highlighting was private equity (PE) activity. Fueled by record financial reserves in the domestic and international markets, the overall value of deals for PE acquisitions rose by 63% to a total of €10.4 billion - the highest level recorded since 2015. Volume also increased significantly, 46% with 130 deals in 2021 versus 70 the previous year.
A key feature in the re-emergence of PE activity was 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 real estate specialist CA Immobilien Anlagen AG by Starwood Capital Group for €4.3 billion - the largest private equity deal of 2021.
Other important conclusions of the report include:
- Four countries continue to dominate. The top four countries in terms of M&A deal volume 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 in terms of volume in 2020. In terms of total deal value, Russia took first place with disclosed transactions totaling €20.4 billion, an increase of 15% compared to 2020. Austria, Poland and the Czech Republic were in second, third and fourth place respectively. The Czech Republic stands out, with the total deal value almost quadrupling every year to €10.3 billion, largely due to the strength of a single technology deal.
- Technology sector in the spotlight. Technology stands out as the biggest generator of business inbound of the ECL region in 2021. The performance was astonishing, with the value almost quadrupling every year to €10.1 billion and the volume rising to 86%. This activity was driven by the accelerating trend of digitalization, as well as the growth in demand for nearshoring as a result of the Covid-19 pandemic.
- High ratings in ECL. Merger market data shows that the median valuation multiple for the ECL region across all sectors was 11x in the 2020-21 period, slightly ahead of Western Europe at 9.69x. One of the downsides of this climate of high valuations is that it can generate unrealistic expectations on the part of sellers - especially when family businesses are put on the market.
For Celso Fernandes, Financial Advisory Director at Mazars in Portugal, "The cash and liquidity reserve, the positive post-pandemic outlook, the demand for digital assets and the recovery in tourism will certainly be driving aspects of 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 an integrated international firm specializing in auditing, accounting, consulting, tax 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 UK. partnership and 16,000+ via the Mazars North America Alliance - to support clients of all sizes at every stage of their development. *Where permitted by local law.
About Mergermarket
In M&A, information is the most valuable currency. Mergermarket, an Acuris company, reports on deals 6 to 24 months before they become public knowledge, giving our subscribers a powerful competitive advantage. With the largest network of M&A journalists and analysts, Mergermarket offers the most comprehensive M&A analysis service available today. Our reporters are based in 67 locations across the Americas, Europe, Asia-Pacific, the Middle East and Africa. Visit mergermarket.com