Largest Czech transactions of the year: Nordic Telecom and Tedom. However, according to Deloitte experts, a slight decline can be expected in the last quarter of this year

Prague, 16 December 2024 – Activity in the European M&A market continued to increase in Q3 this year. Experts say this was mainly due to decreasing inflation, reducing euro interest rates and continued positive developments in the stock markets. However, the Deloitte M&A Index forecasts a slight slowdown at the end of this year. According to experts at Deloitte, one possible reason for this may be that some companies postponed the execution of large transactions due to the US presidential election.

In Q3, there was an increase in the number of deals from 2,841 total (recorded in Q2 2024) to 3,040, which represents a 7% increase. The aggregate value of transactions completed over the past 12 months also increased – specifically from the original USD 576 billion to USD 638 billion.

“Several larger transactions completed this year signal growing confidence among companies and investors. Although some uncertainty remains, particularly about ongoing geopolitical conflicts and the impact of the US presidential election, I sense a degree of optimism. This is driven in particular by expectations of further interest rate cuts and improving valuations, which are positive indicators for businesses and investors who will be looking for opportunities in the M&A market in the upcoming months,” explains Jan Vomáčka, Partner in the Financial Advisory Department at Deloitte.

“Given the factors mentioned, I expect a slight decline in announced transactions in the last quarter of this year, specifically to 2,964. With record high financial reserves and a more favourable interest rate environment, private equity firms are prepared to make strategic acquisitions, market optimism is growing, and this year’s number of larger deals indicates renewed interest among investors," adds Deloitte’s Jan Vomáčka.

According to Deloitte experts, investment activity in the Czech Republic continued to be constrained by high interest rates, which the Czech National Bank began to gradually reduce at the end of 2023. The biggest negative impact on the economy is weak foreign demand, especially from Germany, where the government has also worsened the economic growth outlook for this year. Instead of moderate growth, it now expects GDP to fall by 0.2%. The recovery of the Czech economy has so far been only moderate. In Q2, GDP grew by 0.3% compared to the previous quarter and by 0.6% year-on-year. The main sources of growth were rising final consumption expenditure and gross fixed capital formation. While domestic demand has recovered as inflation receded, weak foreign demand remains a drag on growth, according to Deloitte experts, with industry suffering the most. The role of the main engine of growth has therefore shifted to the services sector.

According to Capital IQ, 27 transactions took place in the Czech Republic in Q3 2024, the largest of which was the acquisition of a 100% stake in Nordic Telecom Holding, which provides fixed and wireless internet access by O2 Czech Republic. The second largest was sale of Tedom, an energy and engineering company owned by PE firm Jet Investment, to Japanese industrial holding Yanmar Group. There were also several smaller to medium-sized transactions. For example, Genesis Growth Equity Fund I acquired a majority interest in Predvyber.cz, a company providing specialised services in the HR consulting market. The investment group Rockaway Capital also acquired the book wholesaler Pemic Books, and the Czech company AMiT, a manufacturer of control systems and electronics for transport, took over Top Power, a company that manufactures, installs, tests and assembles electronics.

"Although some transactions may have been postponed due to the US presidential election, the outlook for the European M&A market remains relatively optimistic. We expect transactions to continue to be driven by ongoing digitisation, now accelerated by advances in artificial intelligence, as well as ESG initiatives, decarbonisation efforts and the wider energy transition," says Miroslav Linhart, Partner in Charge of Financial Advisory Services at Deloitte.

About Deloitte M&A Index

The Deloitte M&A Index is a predictive indicator that forecasts the future number of M&A transactions in the market – the number of announced transactions over the period under review – and identifies the key factors influencing deal-making conditions in the European market (defined as the EU27 + UK). The model compiles data from various global databases, including Capital IQ, Mergermarket, Pitchbook, Eurostat and many others. It uses a combination of statistical and algorithmic tools to provide a comprehensive view of M&A market activity. The index consists of market indicators, specifically those relating to macroeconomic realities, liquidity and general market dynamics. Despite the increased volatility of recent periods, caused primarily by the exogenous effects of the coronavirus pandemic and the war in Ukraine, the model retains statistical and econometric relevance and credibility.