When it comes to financing an M&A deal in Central and Eastern Europe, the situation today is much changed from the boom era of 2007. But it’s still possible to get backing for the right kinds of deals and alternative means of financing are worth exploring.

Source: Mergermarket

“We can see that banks are more willing to finance, but then again the number of financing banks is still low,” said Adam Jarmicki, investment manager at private equity firm Penta Investments.

Participants discussed the pros and cons of financing deals through banks, private equity and own funds. Zbigniew Bąk, deputy president of media conglomerate Agora, also noted a fourth option.

“We tend to forget about cash-rich corporations when it comes to financing,” he stated. These companies don’t always demand control of the firm they invest in, Mr Bąk pointed out, adding that sometimes a pre-emptive right of purchase – ensuring competitors won’t benefit from the investment – is enough.

In his opinion, private equity firms are less competitive than in the pre-crisis era. “The battlefield has been leveled to some extent,” he said, forecasting a 12-month window before private equity regains the upper hand over cash-rich corporations. However, Mr Bąk conceded that private equity investors are better than corporates in some cases, such as when deep restructuring and lay-offs are necessary.

Mergermarket, organizer of the CEE M&A and Private Equity Forum, expects to see at least 137 M&A transactions in Poland this year. The highest volume – 37 – is expected in the industrials & chemicals sector, followed by the energy, mining and utilities (23) and consumer (21) sectors.

Indeed, Dieter Lobnig, Bank Pekao’s director and head of financial sponsor solutions for Poland, thinks this will be a banner period for M&A deals. “In Poland, in terms of private equity, investments will be much higher than even in 2007 at the peak of the market, due to good opportunities,” he said.