Investing in CEE: Inbound M&A report 2020/2021

Despite the challenges caused by the Covid-19 pandemic, M&A deal making in Central & Eastern Europe remained robust in 2020.

Thanks to its strong fundamentals, the CEE region continued to attract international investments, doing quite well in comparison with other emerging markets. This publication offers an overview of the inbound M&A activity in the CEE region throughout 2020 and looks ahead to the opportunities and challenges in the coming months.

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Key findings:

  • The M&A market performance in the CEE region in 2020 was solid. Even as volume dropped by 16% – to a total of 648 transactions, down from 768 in 2019 – total disclosed deal value rose by 11% to €49.2bn.
  • The four CEE countries with the highest deal values remained the same as in 2019 – Russia, Poland, the Czech Republic, and Austria. M&A deals done by strategic or financial investors also took place in Hungary, Romania, Slovakia, Bulgaria, Ukraine and the Adria region.
  • Private equity remained exceptionally active in 2020 – total disclosed buyout volume jumped up by 40% year-on-year to €3.9bn with 68 transactions, compared to 71 in 2019. Private equity exits fared even better, with total disclosed value coming to €8.1bn, a 11% rise on 2019 – although volumes dropped 10% to 55 deals.
  • The region continued to attract a strong and steady flow of inbound investment from around the world, particularly Western Europe and North America; €23.9bn flowed in from outside of the region across 2020.
  • The combination of competitive advantages makes the region attractive for investors: a higher degree of political, economic and judicial security than many emerging markets, access to the huge EU market, satisfactory returns on investments, a skilled, multilingual workforce and growing middle class.
  • The technology sector had the highest number of inbound deals to the CEE region in 2020, hitting a total of 57 – up from 51 the year before. In terms of total deal value inbound to CEE, energy and utilities continued to be the top sector, having seen a total deal value of €9.1bn – a 20% rise year-on-year.

Outlook for the coming months

The perspectives for upcoming months are relatively positive. The outlook is for a rebound in 2021, supported by roll-out of vaccines and continued government support for economies. CEE is well-positioned to benefit from the post Covid-19 period, with industrial nearshoring, succession planning, PE funds activity and market consolidation in selected sectors being the main drivers of that trend.

Key findings for Slovakia

  • In 2020, coronavirus slowed down the process of mergers and acquisitions in Slovakia. Twelve contracts were recorded in Slovakia representing a decrease of 43%. Only one transaction had a published value of EUR 6 million.
  • In the field of information and communication technologies, a significant investment was made by the American company Bloomreach, which is a major player in the field of e-commerce. It bought the Slovak company Exponea.
  • Slovakia indicated a number of declines, but this year the recovery is expected.

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