Romanian M&A market evolution during 2023

The Romanian mergers and acquisitions (M&A) market recorded 241 transactions1 during 2023, with a total estimated value of US$ 7.1bn2. This indicates a 6.1% increase by estimated value on a year-on-year basis (US$ 6.6 billion in 2022) and a 6.2% reduction compared to the transaction count of 2022 (257).

On a global level, M&A activity during 2023 continued its downward trajectory, extending a previous decline observed in 2022 and marking a 10-year low in terms of value. This trend was attributed to a prolonged environment of sustained higher financing costs, rising geopolitical tensions, general economic slowdown and heightened regulatory constraints. These headwinds led the value of global M&A to decrease by 13% year-on-year, while the value of European M&A decreased by 19%. In this context, Romanian M&A activity during 2023, much like in 2022, continued to defy both global and regional patterns, emerging once again as a notable outperformer.

Strategic investors maintained their predominant role in the local M&A market, accounting for 88% of transactions in 2023 by volume. Domestic deals experienced a marginal uptick, with 119 recorded transactions, compared to 116 in 2022, while the volume of transactions by foreign investors (inbound) declined by 13.9% year-on-year, totaling 105. Despite a lower overall weight in the total number of deals and a decrease to 11 deals from 14 in 2022, the number of outbound transactions remains strong from a historical perspective and reflects the resilience of Romanian investors’ willingness to execute cross-border transactions.

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“In a challenging regional market environment, Romania continued its upward trend for M&A activity and outperformed established markets in 2023. Domestic M&A transaction levels remained elevated and represented almost half of total volumes, reflecting solid market fundamentals. The investor confidence in the local market is also marked by the announcement of two mega deals – Profi Rom Food and Enel Romania – which accounted for a significant portion of 2023’s transaction values. Given that dealmakers now have greater clarity over what the future holds, in particular about the trajectory of inflation and monetary policy normalization, we expect 2024 to bring further positive dynamics for the Romanian M&A market, backed by pent-up demand from willing investors and record levels of private equity dry powder”, said Iulia Bratu, Head of Lead Advisory at EY Romania.

The most active sectors by deal volume were real estate, hospitality & construction (17.0% of the number of transactions) and consumer products & retail (15.4%), followed by technology (12.4%) and energy & utilities (12.0%). In comparison to 2022, the number of transactions within the real estate, hospitality & construction sector decreased by 16.3% in 2023 due to sustained higher financing costs, but also surpassed technology as the primary sector, suggesting its relative strength. Technology, however, still secured the third position in terms of deal volume, emphasizing the growing importance of addressing digital transformation needs in a new economy, accelerated by the advent of emerging technologies such as artificial intelligence. Consumer products & retail claimed the second spot, boosted by local consumer strength and investor confidence in the Romanian market. Meanwhile, energy & utilities targets continued to benefit from the green energy transition at the European level.

The largest transactions of the year

In 2023, the average transaction size decreased slightly to US$ 40m, continuing its post-2020 downward trend. This effect is also amplified by the consistent trend of unreported transaction values for larger deals. Lastly, the most active investors by country of origin came from the United States (9.5% of inbound deals), the Netherlands (8.6%), France, Switzerland, and Poland (7.6% each).