The Central European private equity market continues its strong run, with continued investments, exits, and fundraising news reported by deal doers. A growing regional economy, continued liquid leverage markets and high number of owner-managed business ripe for backing have all created the ongoing backdrop conducive to PE deal doing.
Markets thrive on certainty, and 79% of respondents expect the strong economy to be maintained (67%) or improve (12%) over the coming months. The Index thus remains high, though slightly less so than our last survey, which mirrors the economic expectations: the remaining fifth of respondents (21%) expect economic conditions to worsen, which is double the proportion of last time (10%).
The backdrop is nevertheless conducive to deal-doing, with over two thirds of respondents (69%) expecting to focus mostly on new deals in the coming months. Leverage for these deals will be plentiful, and market-leading companies will be most competitive – as is perennially the case in our survey. Pricing increases may be coming down, with a doubling (to 17%) of the percentage of respondents expecting vendors to accept less for their assets over the next year.
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The promising activity seen in the CE PE markets over the last 18 months continues, with strong economic fundamentals continuing to support high levels of exits and deals. Local deal doers are nurturing many of the region’s maturing owner-managed businesses, while foreign investors – financial as well as trade – are increasingly looking to the region for some of the more established businesses. Their interest is testament to the successful businesses which have grown into leading, global companies, many under the stewardship of the region’s local private equity houses.
- Mark Jung, Partner, Private Equity Leader, Deloitte Central Europe
The generally optimistic sentiment in the M&A market is reflected also in the growing activity of Czech funds, not only in the Czech Republic but also in their regional transactional activities. The same could be said about investors outside the private equity sector, even though they are not part of our survey.
- Dušan Ševc, Partner, Financial Advisory, Deloitte Czech Republic
11th September 2023
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