According to data from Mergermarket and Raidla Ellex, the decline in M&A deals in Estonia continued in 2023. In total the number of deals fell by 28% to 137 deals. The decline in transactions occurred for the second consecutive year.
Although the number of transactions decreased for the second year and almost 250 transactions were carried out in Estonia in 2021, Ellex Raidla does not consider this too problematic in his transaction overview. 2021 and 2022 were indeed pretty good years in terms of transactions.
According to data provided by Ellex Raidla, which advises on mergers and acquisitions, last year there were 61 venture capital transactions, four large real estate transactions, nine issuances and 63 traditional mergers and acquisitions deals.
Ellex Raidla partner Sven Papp said in the review that the decline in transaction activity in Estonia was even lower than the decline in transaction activity worldwide. The decline in larger transactions was also quite modest.
Last year, 43 transactions over five million euros were reported in Estonia, compared to 59 the previous year, for a financial volume of €456 million last year and €1.4 billion in 2022, respectively. .
In the Baltics, the largest transaction of 2023 was the purchase of Gaso, owner of Latvian gas networks, by Infortar and Eesti Gaas. In terms of volume, they are followed by capital raisings by Skeleton and Elcogen.
The law firm highlights the merger of Tallinna Soojus and Utilitas, the sale of Milrem to Edge, the sale of AS Toode to Kingspan, the sale of half of Dunker AS to Hawesco and the merger of Baltic Workboats and Suomen Työvene as other significant transactions. Also, the introduction of Infortar shares on the Tallinn Stock Exchange.
Ellex Raidla expects that in the next six months the current transaction activity will be maintained, which is somewhat influenced by the price of money, but at the same time by the continued ability of the funds to make investments.
Risto Vahimets, partner and head of transactions at Ellex Raidla, predicts that the new year could see more transactions in sectors less affected by the crisis, such as the defense industry, energy production, pharmaceuticals and medical products, and entertainment. Real estate will also become more attractive in the new interest rate environment, Vahimets noted.
According to Papp, one of the changes in the world of transactions is that the volume of preliminary work to make transactions has started to increase.
“One of the reasons is certainly a significantly more complex economic context, which on the one hand has made it possible to conclude deals that would not have been done in favorable times, but at the same time entrepreneurs are also much more diligent and thorough in concluding agreements”, Papp said.
According to him, the second reason is the price of money, which has made people carrying out transactions more cautious, and the third is the stricter regulatory environment.
“ESG (related to environmental, social and corporate governance) is also an important and developing topic. Previously, ESG was largely a formality, so to speak box ticking exercisethen it is now very real and requires ever-increasing attention both in the preparation phase of transactions and in defining the day-to-day operations of companies post-acquisition,” Papp noted.
In summary, Papp assessed that although transaction activity has decreased both in the world and in Estonia, there is still a large amount of free money in the world and in Estonia that is looking for application.
“Deals don’t vanish, deals are made in both good and bad times, it’s just that the terms of the deal change at different times,” Papp said.
2024-01-16 02:36:00
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