Recently, experts met in Warsaw to discuss the current and future state of the M&A market in Poland and the broader Central and Eastern European (CEE) region. The event, moderated by Ewa Zarnotal (Senior Sales Director, Datasite), included Łukasz Targoszyński (Partner, Baker McKenzie), Agnieszka Pakulska (Partner, Avallon), Michał Bigoszewski (Partner, Deloitte Financial Advisory), Dominik Radzewicz (Head of M&A, Allegro), and Fabian Bohdziul (Executive Board Member, mInvestment Banking).

Although uncertainty seems to becoming a constant for M&A around the world, the CEE region is emerging as a resilient region for dealmaking despite challenging fundraising environments for private equity (PE), higher costs, and regulatory complexity. With European markets starting to face lower interest rates, the region is witnessing many interesting acquisition opportunities. And Poland, in particular, has solidified its role as a key investment destination within the CEE region.

The M&A Landscape

In the first half of 2024, global M&A activity saw a noticeable recovery, with transactions reaching $1.5 trillion – up 18% from 2023, according to Łukasz Targoszyński. Cross-border deals accounted for a significant portion of the total, with technology, healthcare, and energy leading the way. And despite geopolitical and economic uncertainties, PE firms are likely to become more active in the coming quarters.

In the CEE region, the year started cautiously. In Q1 2024, Poland led in deal volume, while Czechia led in value, with the TMT, Consumer/Retail, and Energy sectors playing a significant role. Going forward, the region leads the way with the Middle East in EMEA in terms of potential deal opportunities as well as sector breadth.

Challenges and Opportunities Ahead

This optimism is evident in recent survey results, according to Michał Bigoszewski. The Deloitte Central European Private Equity Confidence Survey 2024 found that investor sentiment in Central Europe has improved significantly: over 40% of respondents anticipate increased M&A activity in the region this year, supported by successful fundraising efforts. However, challenges remain, including the limited number of potential buyers in specific sectors, which has impacted transaction efficiency and dealmaking in Poland.

Additionally, Fabian Bohdziul highlighted rising interest rates and geopolitical tensions, which are reshaping the M&A landscape, both globally and within the CEE. High inflation and tighter monetary policy in major economies like the US and eurozone are affecting capital flows and investment decisions. This environment has led to a focus on due diligence processes, regulatory complexity, and higher costs, which are slowing down some transactions.

Poland and CEE M&A Trends

Looking ahead, the confluence of geopolitical factors and local economic policies will likely have an impact on M&A in 2024. Dominik Radzewicz noted that consumer trends, such as a shift toward e-commerce and digital transformation, are likely to drive increased M&A activity, particularly in the technology, media, and telecommunications (TMT) sector, which is expected to remain the strongest in Poland and the CEE region.

In the PE space, Agnieszka Pakulska added that despite difficult conditions for fundraising, there are still opportunities for growth, especially in sectors driven by megatrends like sustainability, digitalization, and automation. PE funds that can present a long-term value creation strategy stand to benefit in this evolving landscape. And while high inflation and wage costs remain key concerns for businesses, successful price policies and resource management could offset these pressures.

Optimism Ahead

While there are clear hurdles to overcome, M&A remains a crucial tool for companies to adapt, grow, and consolidate in an unpredictable world. With technology and sustainability leading the charge, the market outlook for 2024 looks bright for Poland and the CEE region, offering opportunities for strategic acquisitions and long-term growth.

Click here or contact Ewa Zarnotal for more insights and to join future discussions.