2020 has been a year like no other. Still, despite the COVID-19 pandemic and the economic contraction, dealmakers kept making deals. After March-May initial shock and stay-at-home governments’ orders, a strong rally in the second half of the year helped to lift yearly figures. According to Mazars, total deal value in CEE rose by 11% in 2020, to a total of €49.2bn, even as the number of deals dropped by 16% compared to the previous year, to 648 transactions.
We need to understand where we come from as a foundation for where are we going in 2021:
- Transactions that have been postponed in 2020, as well as new deals, will come to market;
- Private Equity firms have significant volumes of dry powder and are expected to deploy a vast amount of capital that could not be put to work last year;
- Business fundamentals will need to be tested under the new market conditions;
- With the knock-on effect of the pandemic remaining a top concern among investors, competition for good assets will intensify;
- CEE valuation multiples gap versus Western Europe will continue to narrow (10%-15% is our estimate)
- TMT, healthcare-related and consumer sector are expected to be investors’ darlings this year.
Looking forward, we remain positive about CEE region attractiveness for investors in 2021. We estimate an increasing deals volume (+18%) and an increase in value of 8% (€53bn).