By trading with the global economy, the CEE region has been dragged into the credit crunch. Originally not involved in trading the derivatives which were the very cause of the crisis, the reduction in liquidity which constitutes a hallmark in the global economy has dampened Financial Services M&A activity in the CEE region.
This report, produced by mergermarket and CMS, provides an in-depth analysis of 2008 CEE Financial Services deal activity, including leading transactions, as well as an outlook for 2009. Surveyed FS executives are united in believing that M&A activity in CEE Financial Services will decrease as a result of the credit crisis, but are divided as to the severity of the implications.
Helen Rodwell, CEE Head of Corporate at CMS Cameron McKenna, commented, “The volume of deals in the FS sector in CEE has undoubtedly dropped. In Q4 2007 31 deals were completed, while in Q4 2008 that figure was 15. 2008 was a year of change for deal makers, and the air of uncertainty looks set to continue. However, those involved in deals have become more savvy and aware of the current environment and so are better equipped to cope with the year ahead.”
Please visit http://www.mergermarket.com/pdf/CEE-Financial-Services-March-09.pdf to access the full report.
Key findings from the survey include:
- Close to half of survey respondents judge that 2009 CEE Financial Services acquisitions will be driven by low valuations.
- Respondents believe inbound Financial Services transactions in 2009 will originate exclusively from within Europe and the CEE region. Cross-border M&A prospects remain bearish, with 74% suggesting that international deal flows will decrease in 2009.
- Fully 80% of respondents believe that the reason the credit crisis has depressed CEE Financial Services M&A activity is because it has led to a change in risk assessments. Close to half (47%) also consider the macroeconomic downturn outside the region has adversely impacted on M&A volumes, while just 7% suggest that a fall in consumer confidence is to blame.
Additional findings include:
- Over half of respondents believe that the level of private equity buyouts in the CEE Financial Services sector will increase in 2009, while a further 40% consider that buyout levels will remain the same. Respondents believe these private equity buyouts are most likely to originate locally.
- The bulk of Financial Services deal flow is expected to be valued under €250m, according to 93% of respondents.
- Banking and Investment sectors are likely to see the bulk of deal flow, while Pension funds are set to witness the least amount of M&A activity in 2009.
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