Romania’s M&A market recovering after COVID-19, KPMG survey reveals

The second edition of the KPMG publication “The M&A Landscape in Romania” shows increased  optimism among stakeholders, who expect further growth in Mergers & Acquisitions (M&A) activity in Romania in 2021. During the first months, the COVID-19 pandemic caused a lot of distress on the market, with transactions being postponed and uncertainty rising. Starting  from Q3 2020, many transactions have been picking up and the trend is expected to continue, creating a lot of opportunities on the market.  

This year, we expect to see an increase in M&A activity, since the current context could be beneficial for both buyers and sellers. Investors are looking to acquire distressed companies at an attractive price, which could bring them higher returns in the future. However, many are also ready to pay extra for top tier companies that have outperformed the pandemic and demonstrated a resilient business model. Sellers may benefit from the excess liquidity in the financial market and the consolidation trend led by companies with healthy balance sheets. M&A discussions will mainly focus on the achievability of positive business plans.

Furthermore, in this particular context, our survey found a strong sense of optimism, with 61% of respondents expecting high levels of M&A activity in Romania over the coming months. As in the previous edition, Technology (IT) will be the most attractive sector for investors, followed by Pharma & Healthcare, FMCG and Energy & Infrastructure. Private equity funds will continue to scan the market and will have a significant role in acquiring Romanian companies or divesting their portfolios.  

The survey also reveals some potential inhibiting factors that could affect the success of a transaction.  Buyers are mostly worried about substantial differences in price expectations, macroeconomic uncertainty and the lack of suitable targets. COVID-19 is not perceived as an inhibiting factor and most of the respondents are confident that the pandemic will soon come to an end.

As Bogdan Văduva, Partner, Head of Deal Advisory, KPMG in Romania, comments: “Even though the pandemic is still ongoing and we are still recovering from the initial panic, we see a lot of optimism in the market and a considerable number of transactions are expected in 2021. During the past few years, the Romanian M&A market has become a favorable environment for buyers. Going forward, just as the last edition showed, Romania continues to be attractive for both strategic and financial investors as it still has significant consolidation opportunities. The Romanian economy has the potential to reach a value of euro 300bn in the medium to long term.”

George Dumitrașcu, Director, Deal Advisory, KPMG in Romania, adds: “ Right now, the opportunities are polarizing on the one hand into distressed companies, which come at a discount, but face major future risks, and, on the other hand, into champions that have risen on the wave of the pandemic, which come at a premium because of their sustainable business models for the post-covid environment. The middle ground is shrinking.”

Richard Perrin, Partner, Head of Advisory, KPMG in Romania highlights: “There is an increased interest from Romanian companies in consolidating the local market through M&As and even expanding their businesses into other countries in Eastern and Central Europe. Western Europe is the least preferred option due to declining opportunities in more mature markets and geography.”

The KPMG survey aims to provide thoughtful and valuable insights into market attitudes and expectations for the months ahead, to help our clients anticipate and make the most of future M&A opportunities. For more information, please access the survey.

About KPMG

KPMG is a leading local M&A advisor in Romania, advising corporations, financial investors and business owners. KPMG in Romania is part of the KPMG Deal Advisory network, which is the leading global mid-market M&A advisor having closed the largest number of transaction during the last 5 years.

In an effort to gain further insights into appetite for M&As and trends, we surveyed relevant stakeholders for the second edition of our publication The M&A Landscape in Romania in 2021.