How is M&A Holding up Under COVID?


Les Nemethy and Francois Lesegretain investigate how the Central and Eastern European mergers and acquisition market is coping with doing business in a pandemic.

In a nutshell, surprisingly well. This article looks at geographic areas and sectors that have been performing better and general trends in valuation.

While M&A experienced a “near death” experience worldwide in Q2 2020, by Q4 of last year, M&A activity exceeded pre-pandemic levels.

The value of M&A transactions in Central Europe (excluding Russia) increased by 28% in 2020 over 2019. Indeed, Central Europe was the only geographic area in the world where an increase in value of transactions was observable.

It should be noted that, during this time frame, global volume of transactions decreased by 7% and the number of transactions in Central Europe decreased 28%, according to MergerMarket.

Looking at just the Visegrád Four (V4) countries of the Czech Republic, Hungary, Poland and Slovakia, even on a population-adjusted basis, Poland and the Czech Republic by far outperformed Hungary and Slovakia.

In Poland, the value of transactions rose 41% to EUR 11.2 billion from 2019 to 2020, despite COVID-19, though the number of transactions fell from 154 to 124 during the same period.

For the other three Visegrád countries there was a sharp decline in both volume and number of transactions.

Inbound investments, mainly driven by the United States, France, Netherlands and Austria, accounted for a 69.8% share of the market by value in 2020, according to MergerMarket.

M&A by Sector

The impact of COVID-19 has not been the same for all industries. Some sectors have experienced a boom during the crisis and the trend is likely to continue for 2021; other sectors declined and are unlikely to return to normal activity for some time.

The majority of M&A activity seems to have occurred in the following industries:  telecom, media and technology (TMT), industrials and chemicals, business and financial services, and real estate and construction.

On the contrary, the agriculture and transportation industries have suffered a lot during this period with a decrease in deal volume of 35.2% and 37.8% respectively compared to 2019, MergerMarket says.

M&A Valuation Trends

While Enterprise Value/EBITDA multiples have declined in Western Europe over the past few years, they have improved, despite COVID-19, in Central Europe. Although the gap has narrowed, it has not been completely eliminated.

Across Europe, the healthcare and pharmaceuticals sector had the highest median valuation in 2019-20, standing at 15.34x, followed by real estate at 14.39x, and technology at 13.98x.

At the lower end of the valuation scale was energy and utilities, with an EV/EBITDA multiple of just 6.85x, followed by 7.69x for both construction and transport and logistics, MergerMarket notes.

In conclusion, it appears that purchasers and sellers of companies seemed to have learned a great deal about how to cope with the pandemic after the initial shock of Q2 2020.

Zoom meetings and virtual data rooms are now practically universal. It will be interesting to observe whether the current radical peaks of COVID-19 in countries like Hungary and Slovakia will be reflected in the statistics that emerge.

Les Nemethy is CEO of Euro-Phoenix Financial Advisers Ltd. (, a Central European corporate finance firm. A former World Banker, he is author of Business Exit Planning ( and a former president of the American Chamber of Commerce in Hungary.

This article was first published in the Budapest Business Journal print issue of  March 26, 2021.

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