KPMG survey: Romania’s M&A market shows strong growth

Stakeholders expect a further increase in Mergers & Acquisitions (M&A) activity in Romania in 2020 after one of the most successful years in the last decade. The first edition of a new KPMG publication The M&A Landscape in Romania shows investor confidence is continuing to build up, supported by the GDP growth trend and favorable geopolitical position in the region.

Romania has become a significant investment destination, over the last 15 years, for both strategic and financial investors. Buyers find M&As to be a useful strategy to seize the moment in a rapidly growing environment, while sellers try to realize the value that has been built up in local companies.

We expect to see another busy year as positive sentiment is fostered by sustainable economic growth and increased attractiveness of Romanian targets, which are strengthening their market position and are opening new development opportunities through regional expansion. Furthermore, Romanian entrepreneurs, in their quest for growth, continue to be faced with a buy versus build strategy and have begun to consider M&As as an integral part of their strategy.

In the context of a booming global M&A market, our survey found a strong sense of optimism at the national level, with 67% of respondents expecting high levels of M&A activity in Romania to continue over the coming months. Sectors such as technology, healthcare and energy are expected to be particularly attractive.

The study shows that buyers are worried about substantial differences in price expectations and global macroeconomic uncertainties. At the same time, investors consider that target readiness has a material impact on deal making.

As Bogdan Văduva, Partner, Head of Deal Advisory, KPMG in Romania, comments:

“The survey highlights a favorable scenario for this year; the market is driven by a large number of transactions currently in progress and increased appetite for M&As. The M&A market in Romania has seen a remarkable growth trend since 2016, which is expected to continue over the following 12 months. Romania is an attractive market for both strategic and financial investors due to its favorable position in the CEE region (it is the 2nd biggest country in terms of population and had the fastest growing economy during 2016-2019), low tax levels, competitive wages and significant opportunities for market consolidation across dynamic industries. Foreign companies turn to Romania seeking space to expand, based on sustainable economic growth and a highly qualified workforce, while Romanian entrepreneurs are starting to consider M&As as a means to catalyze expansion.”

George Dumitrașcu, Director, Deal Advisory, KPMG in Romania, adds:

“It is probably the most favorable period to capitalize on an emerging market, due to the existence of market consolidation potential and a stable economic environment. In Romania there are many fragmented sectors, offering favorable conditions for consolidation, allowing investors to capitalize on efficiencies of scale, cost reduction and profit optimization opportunities. The process is expected to be driven by both synergetic strategic investors, looking to improve their competitive position, and private equity funds, which are building local and regional champions through buy and build strategies. Economic environment and investor confidence complement the consolidation aims. Romanian GDP is expected to increase at a higher pace in 2020 through 2024 compared to the CEE or EU average, making Romania an attractive market for foreign and local investors.”

Richard Perrin, Partner, Head of Advisory, KPMG in Romania, emphasizes the increasing attractiveness of the Romanian technology sector for investors:

“The technology sector has expanded and attracted significant investors during the past decade and is expected to maintain this upward trend in the future. Romania represents one of the most attractive markets in Europe for technology investments owing to its wide pool of software service providers and the constantly increasing number of certified IT specialists.”

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.

KPMG is a global network of professional firms providing Audit, Tax and Advisory services. We operate in 153 countries and have 207,000 professionals working in member firms around the world. The independent member firms of the KPMG network are affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. Each KPMG firm is a legally distinct and separate entity and describes itself as such. KPMG in Romania and Moldova operates from six offices located in Bucharest, Cluj-Napoca, Constanta, Iasi, Timisoara and Chisinau.