Romanian mergers and acquisitions (M&A) market recorded 241 transactions in 2023, with a total estimated value of USD 7.1 billion, up 6.1% compared to the estimated value in 2022, of USD 6.6 billion, and marking a 6.2% reduction in the number of transactions compared to the previous year, according to an EY Romania study.
Globally, M&A activity continued its downward trajectory in 2023, extending the decline seen in 2022 and marking a 10-year low in total deal value. This trend was caused by factors such as rising financing costs, intensifying geopolitical tensions, a general slowdown in economic activity and increasing regulatory restrictions.
The consultancy notes that the multiple disruptions have seen the value of the global M&A market decline by 13% year-on-year, while M&A activity in Europe is down 19%. In this context, the mergers and acquisitions activity in Romania in 2023, like in 2022, continued to defy both global and regional trends, standing out once again through its performances.
Strategic investors maintained their dominant role in the local M&A market, accounting for 88% of deal volume in 2023. Domestic deals saw a marginal increase in number to 119 (compared to 116 in 2022), while the volume of transactions made by foreign investors (inbound) decreased by 13.9% from year to year, to a total of 105. Although the number of outbound transactions (where the investor comes from this region and the target company from outside it, n.r.) decreased to 11, compared to 14 in 2022, it remains strong from a historical perspective and reflects the increased appetite of Romanian investors to carry out cross-border transactions, states the quoted source.
“In a difficult market environment at the regional level, M&A activity in Romania continued its positive dynamics and exceeded the performance of developed markets in 2023 as well. The number of domestic transactions remained high, representing almost half of the total volume and reflecting the solid fundamentals of the local market. Investors’ confidence in the Romanian market is also highlighted by the announcement of two mega-transactions – Profi Rom Food and Enel Romania, which contributed significantly to the total value of transactions in 2023. Given that both sellers and buyers have now a clearer understanding of the future, especially regarding the evolution of inflation and the normalization of monetary policy, we anticipate that the year 2024 will once again bring positive dynamics for the Romanian M&A market. This will be supported by a return of demand from investors who waited to see the evolution of the market and the record levels of investable capital available to private equity funds,” said Iulia Bratu, Head of Lead Advisory, EY Romania.
The most active sectors in terms of transaction volume were real estate, hospitality and construction (17% of the number of transactions) and consumer and retail products (15.4%), followed by technology (12.4%) and energy & utilities (12%). Compared to 2022, the number of transactions in the real estate, hospitality and construction sectors decreased by 16.3% in 2023 due to the sustained increase in financing costs, but still surpassed technology as the main sector, thus indicating the resilience of the segment.