Central and Eastern European M&A markets diverging

Some markets see increase in deal value and volume, but CEE M&A activity down overall
Private equity fund investment up 16%
Investment by US based companies and funds increases by 61%

Fragmented investment landscape
Investors no longer regard Central and Eastern Europe as a coherent investment area as countries in the region present increasingly different risk profiles. While the CEE M&A market overall was down on 2014, a number of markets saw increases in 2015 in both deal value and volume, as reported in Emerging Europe M&A Report 2015/2016, published by CMS in cooperation with EMIS.

The Bulgarian M&A market

David Butts, Managing Partner, CMS Sofia: “Deficiencies surrounding the rule of law and enforcement of legal rights in Bulgaria, reconfirmed by the recent EU Report under the Cooperation and Verification Mechanism assessing progress in judicial reforms, may have lead potential investors to allocate higher country risk to Bulgaria. This appears to have resulted in investments being diverted to more stable jurisdictions elsewhere in CEE. For example, our report noted very healthy growth in the M&A market in the Czech Republic and Romania, mainly due to increased foreign investments by strategic investors.”

Atanas Bangachev, Partner, CMS Sofia: “We expect M&A activity in the telecoms & IT sector, and investment in the real estate sector to continue. Investors will continue to seek out companies with well-developed manufacturing and exporting capabilities, as well as smaller companies that offer smart solutions and high added value.”