Investing in CEE: Inbound M&A report 2019/2020

The M&A market in Central and Eastern Europe (CEE) recorded 726 deals in 2019, displaying resilience in the face of global economic headwinds, according to new research from Mazars in association with Mergermarket. The report, Investing in CEE: Inbound M&A Report 2019/2020, offers an overview of inbound M&A activity in the CEE region throughout 2019 and looks ahead to the challenges and opportunities in the coming months.

"Location is a clear competitive advantage, with the more developed economies of Western Europe on one side, and the fast-growing markets of Asia and the Middle East on the other. For many investors, the region brings some of the benefits of both."

- Michel Kiviatkowski, CEE Leader of Financial Advisory Services at Mazars

KEY FINDINGS

The region is attractive for investors thanks to its unique combination of competitive advantages: a strategic location bridging western Europe with Asia and the Middle-East, a strong pool of talent, relatively low costs compared to more developed markets, and high levels of economic growth in many regional markets along with a growing middle class.
Despite a few challenges such as Brexit, political tensions in EU and worldwide, coronavirus consequences, etc, the CEE dealmaking forecasts for 2020 are positive and should be in line with the M&A trends observed in 2018 and 2019.
CEE’s economy continued to move forward at a healthy pace in 2019, despite global economic headwinds such as the trade war between the US and China, an inversion in the US bond yield curve and a slowdown in Germany’s economy.
The four main factors influencing transactional activity in the region are: the strong international appetite from strategic buyers to invest in CEE, the increasing Private Equity interest for the region, succession planning and the ongoing market consolidation in a few sectors.
The performance and attractiveness of M&A in the region remains robust. The total value of the M&A market registered in 2019 amounted €42.3 billion, with a total number of 726 deals.
Meanwhile, median EV/EBITDA multiples rose from 6.74x in 2018 to 7.81x in 2019 (compared to 10.91x in Western Europe).
Private Equity activity in CEE continues to develop, with a total of 69 PE buyouts deals in 2019 (€2.9 billion). PE exits were registered at 59 in 2019, with a disclosed total transaction value amounting €6.5 billion. International PE players are mainly involved in larger transactions, whereas local PE firms tend to focus more on small and mid-sized transactions.
Inbound M&A deals involving strategic and financial investors coming from outside the CEE count for 40% of CEE M&A deal volume and 51% of CEE M&A deal value.
International buyers are coming mainly from western Europe, the USA and Asia.