Romanian M&A market up 15% in 2017

The Romanian M&A market posted a 15% increase last year compared with 2016, a report by Deloitte Romania said. “While consolidation will be the key word for many sectors, the local M&A market will continue to generate few transactions exceeding EUR50m this year,” it noted.

The Romanian M&A market reached EUR3.8bn in 2017, according to public sources and disclosed transactions, analysis carried out by Deloitte Romania has revealed.

Overall, by combining all the transactions with undisclosed values, the total market reaches between EUR4 and EUR4.6bn, 15% up on 2016, according to Deloitte estimates.

“M&A activity continued to grow in 2017, but more remarkable was that the number of transactions reaching between EUR100 and EUR500m reached 15, setting a record for the past ten years,” said Ioana Filipescu, Deloitte Romania M&A partner.

Romania continues to be an attractive market for private equity funds and investors interested in the Central and Eastern Europe market, the report noted.

Warnings

But Florin Vasilica, partner and head of transaction advisory services at EY Romania, warned that the corrections seen in the external economic environment combined with a lack of fiscal predictability on the local market counterbalance the rise of consumption and incomes and the favorable geo-strategic situation that Romania now enjoys.

“These factors are evaluated by Romanian entrepreneurs who will look for solutions to make their exit from their mature businesses, while regional and global strategic investors will continue to extend and consolidate their market share.”

“There are more and more Romanian entrepreneurs who have built their business up to a certain level, reached their maximum potential and are looking to move to the next level by attracting strategic or financial investors,” Anda Todor, managing partner at Dentons, told Business Review.

High profile sectors

The sectors expected to get most interest in terms of transactions this year, Laura Toncescu, managing partner, TMO Attorneys at Law in association with KPMG Legal, told Business Review that the FMCG sector is a key area, and there was likely also to be to consolidation in healthcare, agriculture and real estate.

“In the banking sector, we will witness the completion of the transactions started last year. Considering the past deals and also the major changes in the fiscal legislation, we also expect to see NPLs entering another cycle, with fewer deals concluded throughout the year,” Toncescu said.

As for the pharma and medical services sector, Rojanschi of D&B David and Baias told Business Review that consolidation is expected to continue this year based on the fact that the market has fewer large players with the appetite for acquisitions.

“A limited number of transactions, about 15-20, exceed EUR50m every year and we expect this to happen in 2018, too. This is because there are not so many investment targets which can support large values. But the average value of a transaction could rise in Romania too, as local capital consolidates and entrepreneurial businesses become larger and generate higher profitability,” said Rojanschi.

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