Petr Kováč: Current trends in M&A

Current trends in M&A

In November, the Prague Finance Institute held a very interesting meeting on the current state of the M&A industry in the Czech Republic. The fact that the topic attracts considerable attention was already confirmed by the high number of participants: with 200 guests, it was probably the largest purely M&A thematic panel this year.

Right at the beginning, Datasite representative Tomáš Kindl presented interesting figures: how many deals are in data rooms, how many bidders on average participate in competitive transaction situations (less than 2, which is surprisingly low compared to abroad, where it is rather twice as many) or how long it takes to prepare or implement a data room (34 days). He opened a lively discussion about what is happening on the market, and there were also a few trips into the past - after all, some of us already count ourselves among the "veterans" of the local market.

In a factual, but at the same time entertaining discussion moderated by Petr Škočdopole, I was complemented on stage by other advisors, and Tomáš Sýkora, a representative of the PE Fund Genesis, added another dimension. The combination of representatives of the two most active M&A advisory firms in the Czech Republic and Genesis, which is probably the most active PE fund here, brought interesting findings:

1. Igor Mesenski and Tomáš Sýkora and I agreed that Czech M&A is doing quite well. Datasite sees a "flat" trend in the number of open data rooms, but it is not the end of the calendar year yet.
2. There is a new dynamic in the market: not only founding fathers over 65 are selling, but also much younger people in their 40s. Money from the sale of companies tends to flow back into the development of new companies for the younger years.
3. Czech financial groups, family offices or even entrepreneurs are not afraid to expand through M&A transactions outside the Czech Republic and they are quite successful. The footprint left abroad is significant given the size of our economy and proportionally exceeds investors from other countries.
4. We don't have a very active capital market and thus the most common way to exit a family business is to sell to financial or strategic investors.
5. The state has also embarked on strategic infrastructure acquisitions - it has generated controversy, but most people view the purchase quite neutrally with an expectation of what will come of it.
6. AI is unlikely to immediately replace transaction advisors, maybe some of the stereotypical work will go away, but the most important thing - structuring a deal or negotiating buyers as well as sellers - needs human capacity and creativity.

The informal networking that followed also confirmed that M&A is a topic that resonates. More and more companies consider it a regular management tool used to build corporate value. So I am not worried that as an established advisory team we will not have enough interesting deals in this market.