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Investing in CEE: Inbound M&A report 2022/2023
Meanwhile, the imposition of economic sanctions against Russia further complicated the dealmaking landscape. Against this backdrop, supply-chain bottlenecks and labour shortages, a legacy of the pandemic, continued to dampen growth.
Dealmaking conditions could scarcely have been more challenging. Yet, as our report reveals, the impact on M&A activity in the CEE region was much less pronounced than many initially feared. In fact – and with the exception of 2021, a somewhat anomalous record-year for M&A – deal volumes and aggregate deal value in 2022 both reached new highs in CEE.
Non-cyclical sectors remained resilient in 2022. “IT is doing well – businesses of all types need IT expertise, so this sector is quite hot,” says Igor Mišík, Senior Manager at Mazars in Slovakia. “Food production and logistics for fast-moving consumer goods also continue to generate activity. Healthcare is an increasing area of interest because more people are opting to go private. The sector is going through major changes and the strongest privately-owned players are likely to gain in strength.”
One risk for Slovakia is the threat to car manufacturing, the country’s biggest industry. “There are a number of headwinds, including increasing regulation, tougher rules on emissions and the tighter economic climate,” says Mišík. “On the positive side, Volvo is investing in a new plant in Košice that will produce parts of electric vehicles only. This will reduce dependency on traditional petrol and diesel fuelled cars, so it’s good news.”
The region continues to offer unprecedented consolidation opportunities in the mid-market space in industries ranging from healthcare and tourism (sometimes together) to manufacturing and technology.
2023 will for sure be a challenging year. But set against this are the quality of the region’s businesses, the creativity of dealmakers and the continuing support of the EU’s Resilience and Recovery Facility, which is worth more than €100bn to the 12 CEE countries that are EU members. This, and the CEE region’s sound fundamentals, suggests there are good reasons to be relatively optimistic about the year ahead.
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