Der Markt für Fusionen und Übernahmen (Mergers & Acquisitions; M&A) in Polen und die Aussichten für seine Entwicklung

In 2022 Poland once again stood out in Middle and Eastern Europe as the main M&A market player. Despite many economic challenges the M&A  market remained very strong and resilient  to  turbulence connected with inflation and energy prices. According to data of “The Institute for Mergers, Acquisitions and Alliances (IMAA) there were about 11 thousand M&A transactions at a total value of approx. 246 billion Euro. In 2022 there were 380 M&A deals totalling 10 billion Euro compared to 481 deals in the amount of 16.9 billion in 2021 (see  diagram). In addition, there were fewer  large transactions than in 2021, however, 8 deals increased the value to 300 billion Euro. Within the first 7 months of 2023 the market saw a drop in the general number of merger & acquisitions by 28% (corresponding to 162 deals and 2.8 billion Euro) in comparison to the respective period in 2022. At that time there were 225  M&A deals and their total amount decreased by 54 % reaching the figure of 6.2 billion Euros. It was expected that in 2023 the number of M&A deals would reach the amount of approx. 4.9 billion Euro. This resulted in a falling of the number of M&A deals by 27 % and the decrease of their value by 52% compared to 2022.

. Diagram 1. Trends within the M & A market in Poland in the years 1989 -2023 (in billion Euro)
Source: IMAA analysis; imaa-institute.org.

Within the first 9 months of 2023, there were 285 M&A deals on the Polish market announced by the regulator. The increase of the numbers comparing to the respective period in 2022 was the result of a drop in inflation and stabilisation of the economic situation after a turbulent year in 2022. The largest deal was the take -over of the studio TECHLAND, a leading company in the gaming sector and producer of the computer games “Dying Light” and “Dead Island”,  by a Chinese technological entity TENCENT. The value of this transaction was estimated at approx. 6.3 billion PLN (see  table 1). There was also some market stimulation observed in the infrastructure and industrial sectors. The biggest deal of this kind was the sale of the company “Kulczyk Investments Autostrada Wielkopolska”  to the French fund MERIDIAM in the amount of 3 billion PLN. The third quarter of 2023 was characterised by foreign investments conducted by Polish companies, especially in the region of Western Europe. The major acquisition was the purchase of Menzies Distribution by the logistic company InPost for 265.6 billion PLN. This transaction was connected with the expansion of InPost onto the British market.

Table 1. Selected M & Transactions in Poland within nine months of 2023

Source: own work on the basis of: M&A Index Poland I kwartał 2023. Navigator Capital & Fordata; M&A Index Poland Fuzje i przejęcia w II kwartale 2023 roku. Navigator Capital & Fordata; M&A Index Poland. Fuzje i przejęcia w III kwartale 2023 roku. Navigator Capital & Fordata.

Companies in the telecommunications, media and technology sector were especially susceptible to being taken over. However, their share in acquisitions decreased in the second quarter of 2023 compared to the second quarter of 2023 from 23% to 17% (see diagram below). The second ranking was taken by companies from the industrial sector and their share increased from 11% up to 14%. Among purchasers the financial investors representing private equity (PE) or venture capital (VC) were the most active representing 18% of deals on the buyer side and 10% of deals on the seller- side.

Diagram 2. Transactions involving Polish companies grouped in accordance with activities of enterprises in given economic sectors
Source: own work based on: M&A Index Poland. Fuzje i przejęcia w III kwartale 2023 roku.

Distinctive features of transaction processes in Poland are being shaped by the environment of the parties involved and external conditions existing within the acquiring companies and companies being purchased. These basic features of M&A transactions in Poland are among others:

1. Average time of 10 months needed for M&A deal conclusion (from the beginning of negotiations until the signing of the final sale and purchase agreement)
2. Internal identification and selection process of the targeted enterprise being taking over – this method was indicated by 60% of respondents from the group of strategic investors and by 71% from the group of financial investors,
3. Investors are mostly interested in acquiring mature entities in the growth phase
4. Main reasons for failures within such transactions are for instance overly high price expectations of the seller, a changing business environment and development prospects of the given sector and risks/hindrances  resulting directly  from Due Diligence studies.

Despite the ongoing war in Ukraine and economic and geopolitical problems arising from this war, the M&A market in Poland will grow further in 2024. The number of transactions can be affected by some ups and downs but despite this it is expected that  major investments will be made in the sector of technology. One of the factors for the growth of the M&A market in 2024 can be the development of the segment of so called “mid -market-deals”. In recent years medium -sized enterprises have developed their businesses becoming attractive targets for acquisitions. They also have the potential to acquire other businesses in Central and Eastern Europe and in Western Europe. The weaker economic situation and geopolitical instability shall be counteracted by the increase of consolidating tendencies, by the rise of entities offered for sale and the improvement of their price assessment. The main sectors generating economic potential for the M&A market in Poland will be food production, technology and finances.

The M&A sector can also contribute to the development  of the Polish economy. The model of the evaluation  of enterprises based on the increase of production as a result of increasing of employment has run out especially because of demographic reasons. There comes a time to search for an increase of income from sales and efficiency of companies through gaining new markets and industry specifics. In both cases mergers and acquisitions can be principal determinants of favouring development of the economy. Polish companies can also take into account ESG  (Environmental, Social and Corporate Governance) rules within business plans.

One of the trends shaping the Polish M&A market will be succession. The generation change in Polish enterprises is inevitable and may result in taking control over companies by managers (successors) and in the event of lack of interest of further running family businesses it could lead to a decision about the sale of the enterprise to larger entities.