Technology and Healthcare, the Most Attractive Sectors for Investors in Central and Eastern Europe

Forbes, 28-02-2025: As economic conditions become increasingly dynamic, the mergers and acquisitions (M&A) market in Central and Eastern Europe has proven to be a fertile ground for strategic investments. Large companies continue to command higher valuations, driven by rising multiples, while smaller firms face greater perceived risks and volatility.

The second half of 2024 saw a significant uptick in M&A activity, fueled by improving macroeconomic conditions and a heightened appetite for acquisitions. According to the Central and Eastern Europe M&A Monitor report by Dealsuite.com, transactions exceeding €10 million accounted for 41% of the total market, up from 32% in the first half of the year. This shift underscores a clear trend toward larger deals, while transactions under €2.5 million declined to 13%, compared to 23% in the previous period.

M&A advisors have also witnessed increased activity, with 68% reporting higher transaction volumes. Among them, 27% experienced a surge of over 25%, while 41% reported growth between 10% and 25%. Only 1% observed a decline, indicating a stable business environment with expanding opportunities.

On the other hand, not all deals reach completion, with the success rate holding at 59%. Unrealistic valuation expectations remain a key obstacle, cited by 68% of advisors. Other challenges include market fluctuations, financing difficulties, and regulatory compliance hurdles.

In terms of valuations, EBITDA multiples edged up slightly, from 5.2x to 5.3x in the second half of 2024. The most highly valued sectors remain healthcare (7.4x), software (6.6x), and IT services (6.2x), highlighting sustained investor interest in technology-driven industries. The increase in valuation multiples reflects both the growing demand for profitable assets and investor confidence in the long-term prospects of regional companies. Additionally, the gap between large and small company valuations remains significant, reinforcing investor preference for scalability.

The outlook for 2025 is positive, with 75% of advisors expecting further M&A market growth, driven by rising international investor interest. Floyd Plettenberg, CEO of Dealsuite, highlights the region’s strong potential, emphasizing that digitalization will further accelerate market dynamics. “We are witnessing increasing interest from international investors who see Central and Eastern Europe as an emerging market with significant growth opportunities. This trend is supported by strong economic fundamentals and greater availability of capital for strategic transactions,” Plettenberg noted. He considers that compared to other European regions, “CEE countries are adopting online solutions at a much faster pace, enhancing the efficiency and accessibility of M&A processes”.

Digitalization is already playing a crucial role in streamlining transactions, providing transparency, and ensuring rapid access to opportunities. As technology adoption accelerates, Central and Eastern Europe is increasingly positioning itself as a strategic investment hub. Sustained M&A growth, heightened investor interest, and digital innovation are expected to be the defining pillars of the sector in the years ahead, according to a comprehensive survey conducted among 442 leading M&A advisory firms across the region.

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