PwC Romania: Romanian M&A market, up by 17 pc in 2016, reaching a deal value of EUR 3.6 bn

The total value of mergers and acquisitions (M&A) in Romania increased by 17 percent in 2016 compared to the previous year, according to an analysis undertaken by the PwC Romania integrated Transactions team. 140 deals with a total value of EUR 3.6 billion were announced last year.

PwC transaction experts say that the local M&A market will continue its upward trend in 2017, capitalizing on a continued consolidation process in areas such as medical services and pharmaceutics, industrial production and fast moving consumer goods, as well as on the tendency for companies that developed production capacities in Asia to relocate them towards Eastern Europe, including Romania.

“Locally, there is a growing interest for transactions based on the ongoing consolidation processes begun the previous years. We can feel a certain effervescence in the local market, many negotiations and discussions are being carried, and more transactions are being initiated by both sellers and buyers. We see a growing number of entrepreneurs interested in the prospect of selling their company, which helps them receive an indication of the market value of their business, although not all discussions are concluded in actual deals”, explains Cornelia Bumbacea, Leader of the Transactions team, PwC Romania.

For Romania to enjoy a sustainable economic growth it is necessary to encourage businesses through a long-term fiscal vision, which stimulates investments, the analysts say.

“(…) Tax issues are becoming increasingly important for business management and the handling of certain tax issues and tax risks could even cause certain transactions to fail. Strategic M&A projects, which require a long-term commitment, can be encouraged by improving fiscal policy predictability and consistency”, Mihaela Mitroi, Tax and Legal Services Leader, Romania and South Eastern Europe also stated.

In turn, Anda Rojanschi, Partner D&B David and Baias, M&A team coordinator mentioned that there was an apparent lack of correlation with the global market, which declined slightly in the same period. This is due to the fact that last year the local market value was strongly influenced by a small number of transactions with substantial value. Another explanation would be the increasing competitiveness and attractiveness of Romania’s economy in the regional geopolitical context.

According to Dragos Atanasiu, Senior Manager Transactions Services team, PwC Romania, there is an increasing number of financial investors (private equity funds) who are interested in the Romanian market, and are focusing primarily on businesses that have demonstrated a potential for sustainable development, have a competent management team and a consolidated market position.

“The M&A market value and companies’ attractiveness will also increase in the wake of financial performance stabilization of businesses that are likely to be subjected to deals, and amid growing confidence and predictability of the development prospects for the next 5-10 years”, Atanasiu stated.