EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal entity. Ernst & Young Global Limited, a UK company limited by guarantee, does not provide services to clients.
How EY can Help
-
EY-Parthenon consultants help your business' long-term value. Whether you're interested in growth or differentiation strategies, M&A or more, EY can help.
Read more
Despite a quarterly slump, the power and utilities sector’s annual deals rose in 2024, driven by domestic transactions and a shift towards sustainable energy
The power and utilities sector experienced a downturn in both deal value and volume in 4Q24, with 28 transactions amounting to US$0.8b. However, the sector’s annual deal volume for 2024 saw a 6% YoY increase, with 166 deals compared to 157 in 2023. Ranking third in quarterly activity, corporate deals constituted 79% of the sector’s transactions. Poland and Türkiye were at the forefront in deal count, while Greece and Romania led in deal value.
The sector’s deal activity is primarily domestic and the urgent need for modern infrastructure and transition to green energy are driving investment. Despite challenges such as inflation, supply chain issues, and higher interest rates causing project delays, countries like Serbia and Hungary are actively pursuing energy and infrastructure projects with policy and financial support, including government incentives and EU policies.
Domestic deals dominated CEE deal activity in 4Q24 with tech sector focus
Domestic transactions continued to be the dominant segment, representing 55% of total deal volume. The CEE Region saw 148 domestic deals valued at US$5.0b, indicating a downturn from the previous period. The quarter featured three large deals (US$500–US$1000m) in technology, banking and capital markets, and aerospace and defense, compared to one such deal in the industrial products sector in 4Q23.
CEE saw 74 inbound M&A deals totaling US$2.4b, a 36% decrease in count but a 47% rise in value from 3Q24. The USA, UK, Germany, and Sweden were key acquirers, with over half of the transactions focusing on technology, power and utilities, consumer products and retail, and chemicals and advanced materials sectors. Only one big-ticket inbound deal (US$1b+) occurred in the technology sector in 4Q24.
Outbound activity in 4Q24 comprised 45 deals worth US$0.9b, a 50% drop in deal value and a 4% decrease in deal count compared to 3Q24. Of these, 36% targeted entities in real estate, consumer products and retail, and chemicals and advanced materials sectors.
Corporate deals increased modestly in 4Q24, while Poland sustained its lead in regional M&A
CEE recorded US$5.8b of corporate deals, a modest QoQ growth of 7%, overshadowed by a 62% YoY plunge. Concurrently, private equity (PE) transactions amounted to US$2.4b, marking a significant 52% and 50% decline from 3Q24 and 4Q23, respectively. Despite these setbacks, the annual deal volume for 2024 experienced a slight uptick of 1.2%, totaling 1,314 deals, with PE deal volume contributing to this growth with a 6% increase.
Strategic buyers dominated deal activity, accounting for 76% of total transactions, with the technology, consumer products and retail, and power and utilities sectors attracting the most corporate interest. PE activity, making up 24%, featured mainly in technology, real estate, power and utilities, and banking and capital markets. Maximum deal values were rarely higher than US$50m, with a notable QoQ decrease in these smaller transactions and just one corporate deal breaching $1b.
Out-of-region PE acquirer deals dipped slightly in 4Q24, falling from 22.0% in 4Q23 to 21.5%, with European buyers accounting for 64% of these deals. However, CESA-based PE acquirer deals rose from 78.0% in 4Q23 to 78.5% in 4Q24.
The continued ECB rate reductions and the rising wave of digital transformation and renewable energy initiatives is anticipated to invigorate M&A activity despite fluctuating economic growth in CEE
CEE economies face a challenging 2025 with limited growth, high inflation, and elevated policy rates, with the Czech Republic as an exception. Weak eurozone activity and geopolitical volatility, including Trump’s political comeback, is dampening the Region’s outlook. Nevertheless, strong labor markets in CEE countries are fueling wage growth and consumer spending while the ECB's rate reductions are also likely to stimulate capital goods demand, aiding manufacturers.
Despite economic challenges, CEE remains an attractive investment destination, particularly in the manufacturing, renewable energy, and technology sectors, including digital platforms and mobile gaming. The Region’s strategic location as a bridge between Western Europe and emerging markets enhances its appeal for international investors, providing access to both established and expanding markets. Notable M&A opportunities are emerging in the Baltics, with robust growth in technology and green energy sectors, supported by favorable government policies and EU incentives. Similarly, we anticipate Greece having a positive investment climate due to the influx of NextGen EU funds and robust deal activity in sectors such as real estate, banking, and capital markets.
Countries like Bulgaria are streamlining regulatory frameworks to attract energy investments, particularly in renewable grid connections and geothermal power. Hungary and Serbia are shifting financing priorities from real estate to energy and infrastructure, making these sectors key for long-term growth.
The emergence of CEE nation-based funds such as Tech 4 Impact, Purpose Tech, and Tilia Impact Ventures reflects the growing focus on sustainability and ESG-driven investments particularly in decarbonization and energy transition. This diversification, alongside increased international investor participation, and nearshoring trends in the coming three to five years, highlights growing confidence in CEE’s potential for high returns in specialized sectors.