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

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.

Of the 726 M&A deals in CEE last year, 40% were inbound deals from outside the CEE region – a figure on par with the past four years. This highlights the continued attractiveness of the region to international investors in spite of a global downturn.

In contrast to deal volume, total public deal value for CEE fell 12% in 2019 to €42.3 billion. This may indicate fewer big-ticket deals, but it is worth noting that the headline figure does not include transactions with publicly undisclosed values, including two investments in a liquified natural gas (LNG) project in the Russian arctic which are likely to have been substantial.

A unique combination of strategic advantages continues to make CEE appealing to investors, with the region’s economic diversification proving to be one of its main strengths. “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,” explains Michel Kiviatkowski, CEE Leader of Financial Advisory Services at Mazars.

Although investors cannot wholly overlook challenges to dealmaking, the majority of those come from outside of the region. One of the region’s greatest strengths, its strong connections with markets in other regions, also makes it more vulnerable to global shocks such as the outbreak of Covid-19. Nonetheless, the region’s strong fundamentals mean it is well-placed for a recovery once the dust settles.

Further key findings from the report include:

• As the most populous market and largest economy in the region, Russia once again leads the way for regional dealmaking, even with sanctions still in place. Deal value remained steady at €21.5 billion across 167 deals – up from 159 the previous year. Four of the top ten deals in the region and three of the top five took place in Russia, including the year’s largest transaction, which saw Japan Arctic LNG take a 10% stake in the Arctic LNG 2 project for €2.6 billion.

• In terms of inbound activity, Poland rose to the number one leading destination in 2019. The country saw 65 bids, up from 51 in 2018. This was accompanied by a rise in deal value which increased more than twofold, from €1.9 billion to €4.6 billion.

• CEE’s strong industrials sector continued to attract the most inbound deals at 56. However, these were mostly small and mid-sized transactions, totalling €1.1 billion, down from €5.5 billion the year before. Energy and utilities remained the top sector for value, with total inbound deal value of just under €7.6 billion, up from €7.4 billion in 2018, reflective of the large ticket sizes of transactions in this sector.

Both international and regional private equity firms are attracted to the region – at a time of slow growth and low yields in many developed countries, CEE offers much-sought-after value as businesses reach maturity or consolidate. Private equity activity continues to grow, with a total of 69 buyouts in the region in 2019, two more than 2018.

About Mazars in Slovakia:

Mazars has been operating in Slovakia since 2000 and belongs to the biggest audit and advisory companies. More than 130 professionals provide audit, accounting, payroll, tax and consulting services in Bratislava, Košice, Považská Bystrica and Nitra.

Mazars Global robotics centre is based in Slovakia and provides services in the fields of RPA, process mining and artificial intelligence. Mazars Bratislava offices are shared with startup Nettle.ai which focuses on development of chatbots and other AI driven conversational platforms. 

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About Mazars Group:

Mazars is an internationally integrated partnership, specialising in audit, accountancy, advisory, tax and legal services. Operating in 91 countries and territories around the world, we draw on the expertise of 40,400 professionals – 24,400 in the Mazars integrated partnership and 16,000 via the Mazars North America Alliance - to assist clients of all sizes at every stage in their development.

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