SORAINEN: M&A still on the horizon for Baltic companies

08.10.2012, 11:16

A recent M&A survey among Baltic companies suggests that expectations from shareholders and equity investors are increasingly matching in Estonia and Lithuania, so that more acquisitions there could be expected in the next 12 months.

The Baltic M&A survey was carried out for the second year in a row by law firm SORAINEN together with Baltic business dailies Äripäev, Verslo žinios and Dienas bizness. While in general the M&A market is certainly not as active as during the fast development years, nevertheless based on the data Baltic companies in general are still relatively boldly thinking about acquisitions. This trend can be especially highlighted for Estonia and Lithuania.

Acquirers are more likely to buy a controlling stake (over 50% shares), but this requirement is down compared to last year’s survey.   The same trend can be seen in seller expectations, thus creating a good environment for deals to take place.

However, it must also be noted that as many as 41% of respondents who are planning to sell shares in their company have no idea how large a stake they are ready to sell. This shows that in the current “wait-and-see” economic environment, where estimates of next year’s growth are unstable, many Baltic companies are very unsure about their future.

“In 2010-2011 many Baltic M&A transactions were driven by the internal restructuring of big corporations where non-core businesses were sold off. Our clients have indicated that these crisis driven measures are mostly completed by now. Are companies getting tired of the crisis and sticking to the “wait-and-see” strategy? The results of our M&A survey indicate the opposite – Baltic companies may rather have gotten used to the uncertain times and are looking boldly at larger transactions,” comments Toomas Prangli, regional head of the SORAINEN M&A and Private Equity Team.

An interesting tendency showing that Baltic companies are widening their options is evident from the fact that more companies are looking for possible target companies outside the Baltics. While the main reason behind M&A activity continues to be expansion into new markets or segments, it now seems that companies are truly looking towards new markets. This tendency also explains why international/foreign investment banks are now more often considered as external M&A advisors.

The Baltic M&A market survey 2012 was conducted in September in Estonia, Latvia and Lithuania by polling more than 130 companies operating in various business sectors. Those interested can hear more about the most relevant aspects of the M&A market in the Baltic States together with discussions on practical cases during the Baltic M&A and Private Equity Forum 2012 taking place in Tallinn on 18 October.