Forvis Mazars and Mergermarket are pleased to present Investing in CEE: Inbound M&A report 2024/2025. This report offers an overview of investor activity into the CEE region in 2024, looking ahead to the challenges and opportunities for the coming months.

M&A activity

Overall, the CEE region saw 1,270 transactions in 2024, amounting to a combined value of €27.4bn. Though the latter represents a 30% year-on-year decline in value terms, deal volume proved resilient with a 3% uptick compared to 2023.

“It was a challenging year for the region,” confirms Maciej Ptak, Head of Financial Advisory, Forvis Mazars in Poland. “M&A activity was impacted by political and economic uncertainty driven by the war in Ukraine, the crisis in the Middle East and concerns about the German economy. Against this background, higher interest rates reduced the availability of financing for transactions.”

Despite tougher conditions, particularly in sectors such as automotive and real estate, the M&A market in CEE has yet to witness a torrent of distressed deals.

“We are prepared for a restructuring cycle, but it still hasn’t happened. The most activity still revolves around growing, buying and selling businesses,” says Andrija Garofulić, Partner, Financial Advisory, Forvis Mazars in Adria subregion. “But if instability continues, we may see distressed opportunities and restructurings over the next 12 months.”

Private equity activity

Private equity (PE) dealmaking in CEE was also somewhat muted in 2024. Indeed, buyout volumes have fallen consistently in the region since 2021, with 160 announced in 2024, down 2% from 2023. Total buyout value, meanwhile, followed the same up-and-down trend that has been observed in the region for most of the last decade. The 160 buyouts announced in 2024 were worth a combined €5.6bn, down 18% compared to 2023 but comfortably ahead of 2022’s total (€4.4bn).

Despite the subdued year-on-year value totals, there are reasons to keep an optimistic outlook about the PE arena’s potential in CEE, spurred by broader European interest in the region. “European funds have helped to create new opportunities, giving confidence to PE funds to emerge and expand,” says Răzvan Butucaru, Partner, Forvis Mazars in Romania. “Investors are more confident when a fund has already gone through a rigorous due diligence process. This will develop the region, boost local entrepreneurs’ confidence and help them build more mature businesses.”

Outlook

Looking ahead, the major headwinds in 2025 are likely to be political as much as economic. Europe, and not just the CEE region, faces a number of consequential elections in the upcoming months that could result in far-reaching political changes.

But there are tailwinds, too. The dialling down of conflicts in Ukraine and the Middle East is likely to boost confidence, particularly among inbound acquirers. And, perhaps paradoxically, global trade tensions could even accelerate the renaissance of manufacturing in the CEE region.

“Everyone is talking about trade wars with China. CEE is a natural place for manufacturing in Europe and at least part of this is being transferred back into our region,” says Garofulić.
Growth projections for the CEE region in the year ahead are extremely positive, far outpacing those of neighbouring Western Europe. Meanwhile, there are signs that looser monetary policy is helping to break the logjam of deals delayed by disagreements over valuations

“Interest rates have come down and inflation seems to be under control, so it is a much healthier environment than a year ago,” concludes Lukáš Hruboň, Forvis Mazars in the Czech Republic. “This could have a fruitful impact on dealmaking in 2025.”

Further key findings from the report include:

• Regional hotspots. Poland, Austria, and Romania were the CEE region’s top M&A deal generators in terms of volume in 2024, a pattern that has remained unchanged over the past three years.
  In terms of aggregate deal value, Hungary took the top spot with transactions totalling €6.5bn, followed by Poland (€5.8bn) and Austria (€4.9bn), though most of Hungary’s aggregate deal value was generated by just two large transactions.
• Sector focus. Innovative tech and sturdy industrials assets were the top attractions for inbound dealmakers in 2024. The technology sector generated the greatest number of deals, contributing a grand total of 216 transactions (representing 17% of all activity), of which nearly two-thirds (133) were led by bidders from outside the region.
  After technology, the next biggest contributor to inbound M&A was the industrials sector, with a total of 82 deals by non-CEE acquirers.
• Deal multiples among lowest on recent record. The median EV/EBITDA deal multiple for the CEE region (across all sectors) was 6.7x in 2023/24, according to Mergermarket data. This compares with 9.4x for the rest of Europe, though the gap between those multiples has narrowed over the last three years. Interestingly, CEE’s median EV/EBITDA multiple was up in 2023/24 compared to the preceding period, when it was 6.1x. By contrast, the enterprise multiple for the rest of Europe is down, sliding by more than two turns of EBITDA versus 2022/23.

The report is also available at forvismazars.com.