The end of the year might be a busy time for the M&A market, with deals signed in IT, retail, construction supplies or energy sectors, consultants say.
The political developments this year made investors cautious and less interested in the companies’ financial results and therefore the about 40 deals barely kept the M&A market going.
Investors are showing a wait-and-see attitude “in a year of parliamentary elections and potential changes in the current taxation system or in the related systems,” said Bogdan C. Stoica, partner with law firm Popovici Nitu & Asociatii.
This law firm is one of the most active legal consultants for M&A. Some of its most important cases lately are the acquisition of chemical plant Azomures by Swiss-held Ameropa, one of the most important deals of the last few years and the assistance provided to Auchan and Immochan in buying the former industrial sites of Tractorul Brasov, Grantmetal and Tricodava in Bucharest for the development of shopping centers.
The M&A market has shrunk from several billion euros in the boom years to just hundreds of millions, mainly driven by the international transactions that included the Romanian subsidiaries.
“After the rather optimistic expectations at the end of last year and the beginning of this year, I think we can say 2012 turned out to be rather disappointing. The market was there and so were plans. International and domestic turmoil followed, which eventually turned the year into one significantly worse than expected,” Bogdan Stoica said.
The low number of deals is not the only bad news there is for the consultants in this business. Deals are now taking longer to complete and they only target either very good companies or distressed assets, which keeps the market very low.
“Other than the deals targeting leaders in their respective industries, if we were to talk about what investors are generally interested in, we believe that would be energy, oil and gas, mining, IT and agriculture,” said Ioana Filipescu, managing director of Raiffeisen Investment Romania SRL. A look at this year’s deals shows that foods, energy, online and real estate have been the industries of choice.
“The investors’ appetite will definitely improve once the overall economy stabilizes, based on a realistic budget draft to stimulate the economy through investments,” says Radu Stoicoviciu, partner and head of advisory services with PricewaterhouseCoopers Romania.
He is the most optimistic of all consultants and says Romania’s M&A market is slowly and steadily becoming an active market again. More deals can be closed by the end of the year and some of them have already been signed but not finalized yet, he added.
Popovici Nitu & Asociatii’s Bogdan Stoica, too, says he expects several deals or conclusion of already signed ones by yearend. The industries where he sees such deals done are IT, retail, construction supplies, fast moving consumer goods and professional services (valuators for instance).
Raiffeisen Investment’s Ioana Filipescu says she is working on two deals in progress that might be completed by yearend.
“Deals have been taking longer than before in recent years. Investors are extremely cautious when making decisions and due diligence is more thorough. The difficulty in securing local funding, too, contributes to the slowing down of the process,” Ioana Filipescu said.
Consultants in this industry used to say not long ago that one of the factors preventing the successful completion of a deal was the too high expectations of buyers. After almost four years of crisis, they are now saying entrepreneurs have finally adjusted their expectations.
(English version by Loredana Fratila-Cristescu)