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Following strong M&A activity in late 2024, the CEE Region experienced a notable slowdown in 1Q25, with deal volume declining both QoQ and YoY. Despite this contraction, total deal value surged significantly — up 88% QoQ and 113% YoY — driven by a sharp rise in mid-size to large transactions. This shift reflects a strategic pivot toward higher-value investments amid ongoing economic uncertainties.
Chapter #1
Deal volume fell in 1Q25, but value surged due to a rise in mid to large-size strategic investments.
A total of 209 transactions were recorded in 1Q25, amounting to US$16.8b. While the number of deals dropped by 36% QoQ and 37% YoY, deal sizes shifted notably upward. Transactions between US$100m and US$5b represented 33.3% of disclosed deals, more than doubling from 14.4% in 1Q24. Conversely, smaller deals under US$50m declined to 52.4%, down from 75.6% a year earlier. Notably, five mega-deals exceeded US$1b — a stark contrast to just one during the same period last year.
Poland recorded the highest number of deals in the region, while the Czech Republic led in total disclosed deal value. The technology sector continued to dominate in terms of volume, with consumer products & retail and power & utilities also ranking high, suggesting that sectoral resilience remains a key factor in deal prioritization.
Domestic demand served as the primary engine of growth across CEE economies during the quarter, underpinned by tight labor markets and moderating inflation. Although investment appetite was tempered by global uncertainties, robust consumption created fertile ground for M&A in consumer-facing sectors.
Anticipation of new US-EU tariffs — including a projected 10% blanket duty starting in Q2 — has weighed on manufacturing-heavy markets. However, this may prompt strategic supply chain localization and related acquisitions. Meanwhile, EU funding, particularly from the Recovery and Resilience Facility, continues to catalyze deal activity. Poland and the Czech Republic, in particular, stand to benefit from increased infrastructure spending and PPP initiatives.
Amid shifting global security dynamics, rising defense budgets are likely to spur deal-making in the defense sector. Countries with strong manufacturing capabilities, such as Poland and the Czech Republic, are well positioned for vertical integration, joint ventures, and cross-border consolidation.
Despite challenges from sluggish German industrial output and intensifying global competition, CEE economies are actively working to diversify their manufacturing bases. Poland’s export model — which emphasizes value-added production and reduced trade dependence — signals long-term opportunities in advanced manufacturing and regional supply chains, likely supporting targeted M&A activity in the quarters ahead.
Chapter #2
Poland and the Czech Republic lead deal activity while technology and consumer sectors show strength.
In 1Q25, Poland and Türkiye led CEE in deal activity, with 48 deals (US$1.76b) in Poland and 38 deals (US$1.81b) in Türkiye, despite YoY declines of 41% and 31%. In Poland, key sectors targeted included technology, power and utilities, health care, consumer products and retail, which accounted for 52% of the nation’s deal volume. Recent deals in Poland’s digital and technology sectors show a shift toward consolidation, operational efficiency, and vertical specialization.
The Czech Republic and Türkiye topped regional deal values in 1Q25. In Türkiye, technology and life sciences drove deal volumes, with 95% of deal value coming from consumer products and retail, media and entertainment, and infrastructure. In Greece, health care, infrastructure, and insurance represented 86% of deal value. We expect the Czech economy, bolstered by moderating inflation and rising public investment, to see selective M&A opportunities in consumer-driven and industrial sectors, supported by EU funding and German fiscal stimulus.
The technology sector remained the most active in CEE during 1Q25, with 57 deals totaling US$1.2b. Despite a 17% decline in deal volume YoY, deal value rose sharply by 84%, indicating a clear shift toward larger, higher-value transactions.
Inbound transactions accounted for the majority of technology deal volume in 1Q25 at 39%. Poland, Türkiye, and the Czech Republic led the sector’s deal activity by volume, while Poland and Ukraine led by deal value. In 1Q25, the share of mid and large-sized deals (US$100m–US$5b) rose from 9% to 36% YoY, while transactions below US$50m declined from 91% in 1Q24 to 64%.
Strategic investors drove 68% of deal volume, with private equity contributing the remaining 32%. Overall, the sector is undergoing focused consolidation and vertical integration, as firms seek to scale operations, strengthen market positioning, and expand digital capabilities across the Region.
Chapter #3
Consumer and utilities sectors led by local demand; domestic and inbound deals shift in value.
The consumer products and retail sector saw 35 deals worth US$6.4b in 1Q25 — a 974% YoY and 3,806% QoQ surge in deal value, despite a 38% YoY and 5% QoQ drop in volume.
Domestic transactions dominated the sector, accounting for 63% of deal volume. Poland led the sector’s deal momentum, Türkiye, and Greece in deal count, and Latvia in deal value. In 1Q25, the share of mid and large-sized deals (US$100m–US$5b) rose from 6% in 1Q24 to 45%, while transactions below US$50m declined from 76% to 36%.
Despite a decline in volume, corporate transactions drove around 77% of deal activity, with strategic consolidation focused on enhancing market presence, operational efficiency, and profitability.
The power and utilities sector recorded 23 deals worth US$0.9b in 1Q25, marking a 15% QoQ increase in deal value, though both value and volume declined YoY. It ranked third by deal volume, with corporate buyers driving 91% of transactions.
Domestic deals accounted for 48% of deal activity, and Poland led the sector in both deal count and value during the quarter.
Energy transition and infrastructure upgrades remain key M&A drivers, with strategic and state-backed investors targeting hydropower, wind, solar, hydrogen, and fuel infrastructure to enhance energy security and meet EU climate goals.
Supporting this shift, the EIB’s US$108b (€95b) 2025 investment plan prioritizes clean energy. In January, it committed US$0.5b (€400m) to Poland’s Baltica 2 offshore wind farm to accelerate the Region’s green transition.
Chapter #4
Infrastructure, defense, and nearshoring will drive strategic M&A in CEE in 2025.
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Read moreIn 1Q25, domestic deals led the CEE market with 106 transactions worth US$6.0b, making up 51% of total volume. While deal count declined YoY and QoQ, deal value rose by 10% QoQ. Media and entertainment, and infrastructure recorded three mid-size to large (US$500m–US$1000m) deals, while only one big-ticket (US$1b+) deal occurred in the oil and gas and chemicals sector.
Inbound activity reached 70 deals valued at US$6.1b. Despite a 23% QoQ and 25% YoY drop in deal volume, deal value surged by 144% QoQ and 425% YoY. The UK, Germany, US, and Sweden were the top acquirers of CEE-based targets. Technology, power and utilities, and consumer products and retail made up 51% of inbound volume, with three US$1b+ deals in the telecommunications, health care, and consumer products and retail sectors in 1Q25.
Outbound deals totaled 33, worth US$4.7b in 1Q25, a 403% QoQ and 705% YoY increase in deal value, despite a decline in deal volume. Technology, media and entertainment, and consumer products and retail accounted for 58% of outbound activity.
In 1Q25, private equity (PE) deals in the CEE Region surged to US$8.7b — up by 230% QoQ and 435% YoY — surpassing corporate deal value, which rose by 29% to US$8.1b. Despite the deal value growth, deal volumes declined, with PE transactions down by 29% to 58 and corporate deals falling by 39% to 151.
Out-of-region PE acquirer-based deals rose to 24% in 1Q25, up from 20% in 4Q24, driven primarily by European investors, who made up 71% of such deals, highlighting the growing interest in cross-border PE transactions. Meanwhile, CESA-based PE activity dipped to 75.9% in 1Q25 from 80.5% in 4Q24, though it remained the dominant source of PE deals.
Strategic buyers accounted for 72% of total deal volume, with PE at 28%. Technology, power and utilities, and consumer products and retail led corporate deal volume, while PE was most active in technology, consumer products and retail, infrastructure, health care, life sciences, as well as oil and gas, chemicals.
In 1Q25, most of the disclosed transactions had PE and strategic buyers concentrated in the smaller deal (up to US$50m) bracket, with two corporate and three PE deals exceeding US$1b. Additionally, there was a QoQ reduction in the number of smaller deals (up to US$50m) occurring in 1Q25.
The CEE Region enters 2025 with a steady economic outlook, driven by strong domestic demand and easing inflation. Poland, the Czech Republic, and Slovakia are set to lead regional growth, supported by EU funding and private investment. However, challenges loom with the anticipated 10% US tariffs on EU trade, which could impact export-driven economies, particularly those heavily integrated into German supply chains. We expect fiscal stimulus from Germany to offer mitigation, but trade policy uncertainty continues to dampen investment sentiment.
Monetary policy across the Region remains cautious, with interest rates held steady or reduced gradually in countries like Poland and the Czech Republic. While the Region faces external volatility and inflation concerns, key sectors such as green energy, infrastructure, and digitalization remain attractive for investment, bolstered by EU-backed funds and private capital. The European Investment Bank’s (EIB) substantial funding, particularly for green and digital transition projects, will continue to play a pivotal role in driving investment and supporting infrastructure upgrades across the Region.
Infrastructure, particularly transport, remains a focal point in the Region, with major projects like the US$31b (€31b) Central Communication Port and TEN-T expansion driving new investment opportunities, especially through public-private partnerships. We see modernizing transport networks as critical to improving connectivity and cross-border trade. Nearshoring trends are boosting M&A activity, with Poland, Romania, and the Czech Republic emerging as key hubs for global companies restructuring supply chains amid geopolitical uncertainty.
The defense sector, particularly in Poland, is also gaining momentum, with defense spending set to reach 5% of GDP in 2025, stimulating growth in military production, planning, and dual-use technologies. We expect the ongoing conflict in Ukraine to accelerate investments in this sector. Despite external challenges, the M&A landscape in the CEE Region is ready for growth in 2025, fueled by stabilizing financial conditions, lower inflation, and reduced financing costs.
The Region’s strong economic fundamentals — skilled labor, proximity to Western Europe, and robust infrastructure — make it an attractive M&A destination for both domestic and international investors, particularly in countries like Poland, Romania, the Baltics, and Greece. Greece is gaining momentum with strong 2.1% GDP growth and attracting significant investment in infrastructure and real estate. Its strategic location, improved credit ratings, and political stability make it an increasingly appealing destination for international M&A activity, especially as it benefits from EU funds and growing investor confidence. Cross-border investments and strategic focus on key sectors will continue to shape a positive M&A trajectory in the CEE Region in the coming months.
In 1Q25, M&A activity in Central and Eastern Europe slowed in volume but surged in value, rising 113% YoY due to a spike in mid-size to large deals. Poland led in deal count, while the Czech Republic topped deal value. Technology, consumer products, and power and utilities sectors drove activity, supported by strong domestic demand and EU-backed investment. Despite trade uncertainties and geopolitical risks, the region remains attractive for strategic and private equity investors, with nearshoring, infrastructure, and defense fueling future growth.
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