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Wolf Theiss & Mergermarket Study: Cautious optimism for M&A in CEE/SEE, with PE firms poised to profit post-COVID-19

In the wake of the COVID-19 pandemic, dealmakers are broadly positive about the prospects for M&A in Central, Eastern and South-Eastern Europe (CEE/SEE), according to a new survey from Wolf Theiss and Mergermarket. Just over half (52%) of respondents said that the health crisis will increase their appetite for deals in the next 12 months.

This follows a year where M&A value in CEE/SEE was up 29% compared to 2019, reaching €28.5bn – a stark contrast to the 7% drop in global deal value during the same period. However, a 22% year-on-year decrease in the volume of transactions, down to 406 deals, meant that CEE/SEE did not emerge from 2020 wholly unscathed.

The Wolf Theiss/Mergermarket study, M&A Spotlight: CEE, polled 150 senior-level executives from both corporate and private equity (PE) firms about their experiences of M&A in CEE/SEE and their expectations for the future.

More than two-thirds (69%) of respondents said that they are likely to invest in CEE/SEE based on past experience, and 65% also said they are likely to invest again on the back of satisfaction with their most recent deal.

Tellingly, when it comes to the post-COVID outlook, PE respondents were far more bullish about future prospects than their corporate counterparts. While 43% of strategic buyers reported having less appetite for deals, only 16% of PEs agreed; meanwhile, just 10% of corporates said they were eager to pursue significantly more deals versus 26% of fund managers who said the same.

PE is in a strong position in part because of its attitude towards risk-taking in terms of participating in an upside cycle of the economy,” said Horst Ebhardt, a Partner in Wolf Theiss' Vienna office. “As an asset class, it has also accumulated a significant amount of cash that it needs to deploy and now there are many different deployment strategies. PE can offer a wide range of fund vehicles, depending on the sector or the level of envisaged corporate control. For example, we now increasingly see major PE funds taking minority positions in fast-growing companies.

The TMT sector claimed €8.3bn of deals across the region, a 29% market share of total M&A. While technology played a starring role in global M&A in 2020, in CEE it has been telecommunications that has taken a front row seat. 

Elsewhere, environmental, social and governance (ESG) issues were highlighted as a growing part of the dealmaking landscape in CEE/SEE. Nearly two-thirds (63%) of respondents said that ESG scrutiny in deals will increase in the next three years, with 37% thinking it will increase significantly.

To view the full study, please click here:

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