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M&A market in Estonia in 2013. was in upward trend in contrast to European market.

World M&A sector was in downward trend in 2013. When the number of transactions stayed in the same level as 2012, the total deal volume decreased 3.2% according to Mergermarket annual report. The total volume was in 2013 2,215.1 B$. European M&A deals valued at US$ 631.6bn dropped 12% from 2012 (US$ 717.8bn) and represented a second annual decline.

On the other hand Baltic M&A sector showed good growth. According to the survey made by five legal companies lead by Tark Grunte Sutkiene the M&A transaction number increased 40% in 2013 y-on-y comparison. Legal adviser Sorainen also sees positive growth trend in Baltic M&A market.

Estonian M&A market has been influenced by the Scandinavian investment funds exits and buyouts of local capital. One of those funds who closed its portfolio in Estonia was Askembla Growth Fund who sold Bauhof DIY retailer and My Fitness fitness clubs chain shares in 2013 summer MBO. In November the fund made MBO in TD Baltic electronic wholesaler in Baltic. In the beginning of 2014 they sold last two companies to Klick Eesti consumer electronics retailer and Coral Arendus Real Estate Company. The closing trend of Scandinavian funds may continue because of the time restriction of funds.

At the same time when Scandinavian Funds are making exits in Baltic States there are local private equity companies that will open new funds. The Baltic Innovation Fund (BIF) will invest 100M€ into private equity and venture capital funds focusing on the Baltic States over the next four years. The total amount with private investors funds will be over 200M€ that will be available for the markets. Baltic biggest fund manager BaltCap opened new fund BaltCap Private Equity Fund II in 2014 February and made its first investment in Lithuania. The fund will invest in small and mid-sized companies with target of 100 M€ in total size. Also the different analyst expect the growth in small and mid-size M&A market with deal size up to 5M€.

Latvian EURO currency adaptation in 2014 will also influence the M&A market locally and Baltic cross border transaction. Sorainen law office senior associate Sergej Butov sees common effects with EURO adaptation in Latvia as it was in Estonia :“As we saw in Estonia, the market will have the biggest effect one year before and one year after the EURO currency adaptation“.

Aleksei Vorobjov, Investment Agency OÜ analyst

Phone:  +372 519 14 807 
E-mail: aleksei.vorobjov@agency.ee