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FORDATA: 2021's M&A market in CEE has already shown signs of growth
According to the CEE Expert Report prepared by FORDATA, the region's leading virtual data room provider, the first quarter of 2021 was evaluated positively by M&A experts. The number of transactions grew, whereas the investment sentiment reflects much bigger stability compared to that of the analogical period of 2020.As described in the report, although COVID-19 still has influence on the dealmaking process and shapes the market, it does not do so to the extent observed last year and now the rebound of local economies drives in new investments. Big companies and funds have enormous amounts of dry powder which can be used, while digitization and optimization of practically all industries results in new acquisitions and restructuring processes. “More and more corporates feel comfortable taking calculated risks and driving their M&A agenda forward to shape the future of the company. Mid-market companies are now more comfortable with the pandemic than they used to be. M&A targets, on the other hand, will come from a growing pool of sellers — businesses struggling during the recession, private investors always thinking about holding periods and exits, and companies rethinking their strategy and not going to separate non-core business assets” - comments Torsten Adam, Managing Partner at ARTEMIS Group, quoted in the report. As Czech M&A market saw a 20% decrease in transaction numbers last year, it may now be on its way to exceed the result from 2019, according to the report's experts. In Poland, although the number of transactions was bigger y-o-y in 2020, the first quarter of this year already saw a record number of 76 deals. In the entire CEE region, companies in TMT, healthcare, production and services sectors are currently the most attractive acquisition targets. According to Alicja Kukla-Kowalska, Head of Sales EMEA at FORDATA, as quoted in her comment on Polish M&A, “IT companies practically do not leave the top of the podium of the most willingly acquired entities and this should not change in the nearest future.” “PE/VC funds, which woke up in late 2020, are still looking for their investment opportunities, despite higher company valuations and uncertainty remaining in the most sensitive sectors of the economy. Their share on the buyers' side should therefore be significant in the coming periods” - adds Kukla-Kowalska. Some of the most significant trends observed in the mergers and acquisitions market in Central and Eastern Europe, as pointed out in the report, are the strengthening of supply chains and online presence by companies, which translates to the growth of the e-commerce sector; recovery of cross-border dealmaking and stronger adaptation to remote dealmaking.