More than 300 representatives of private equity funds, investment banks, and tax and legal advisory firms who provide services in Central Europe gathered at this year’s Forum, which took place in Warsaw on October 3 and 4. The main panel discussions concerned fundraising strategies, the prospects for M&A deals in the region, changes in tax legislation, the impact of gender diversity, and insights into the biggest M&A transactions.
“We see in our law practice, and we heard during the Forum, that the M&A market in CEE is robust,” said Ron Given, Co-Managing Partner at the Wolf Theiss Warsaw office. “Challenges do remain in Central Europe, though, as these markets still require a bit more explanation to the greater investor community and moderate premiums because they are still considered developing markets in some quarters.”
This year, Wolf Theiss advised French media and publishing group Lagardère on the sale of its central European radio businesses as well as the China-based producer of home appliances Hisense on its takeover of Slovenian white-goods manufacturer Gorenje.
In the first three quarters of 2018 deal value in CEE increased to €11.6 bn, almost 30% higher than in the same period of 2017, according to data announced by Mergermarket during the Forum. The number of deals went down to 277 from 345.
Growing CEE companies remain on the radar of private equity funds. Data from Mergermarket show that the value of buyouts in January-September 2018 rose year on year to €3.6 bn, and is already higher than at the end of 2017, when it reached €2.9 bn. The acquisition of Czech pharmaceutical company Zentiva by Advent was the biggest private equity buyout in Central Europe this year.
Deal-making in Europe is being affected by changes in tax legislation at both the European and the national level.
“New regulations such as the Anti-Tax Avoidance Directive and MLI legislation have influence on the economic and legal effects of M&A deals. Therefore, deal makers need to put more effort into structuring the deals and providing substance to investment vehicles,” said Karolina Stawowska, partner at Wolf Theiss Warsaw and the head of tax practice, who moderated a panel discussion on the topic.
Gender diversity in upper management and board positions is also having a positive impact on deal-making in Europe.
“Gender diversified boards mean companies have many different perspectives and more information allows them to make better business decisions,” said Tomasz Stasiak, partner at Wolf Theiss Warsaw and head of the Real Estate and Construction practice, who moderated a panel discussion on the topic.
Experts from Wolf Theiss and Forum participants agree that investors may remain optimistic about transactions in CEE markets.