May 2024

Despite the Crisis, M&A in Poland Marches On

The naysayers have been highlighting the fact that inflation, the cost-of-living crisis, the Russia-Ukraine war, and the Gaza crisis are Herculean hurdles to economic growth and investment worldwide.

Slowdown in Europe

In Europe, fears of a slowdown materialised across the continent. The largest countries are tightening their belts. Continued fallout from Brexit left the UK falling into a technical recession in February 2024, while at the same time, France was forced to cut spending as its GDP growth forecasts dropped, severely darkening the mood for President Macron regarding his plans to revamp the French economy.

Tired Man of Europe

The EU’s main economic driver, Germany, had been labelled the “sick man of Europe” by many. German Finance Minister Christian Lindner’s rebuttal was measured when he relabelled his country a “tired man”. His colleague Economy Minister Robert Habeck was less diplomatic, claiming that Germany was “in troubled waters” – he had previously said Germany was in a “dramatically bad” situation.

Deutsche Welle claimed the German government was pursuing a misguided economic policy, leading to deindustrialisation and forcing companies to move production abroad. A prime example was 125-year-old Miele, a hitherto symbol of German quality. Miele made the decision to move its household appliance production to Poland. Miele’s owner cited attractive electricity prices, reduced bureaucracy, and more favourable building regulations as the reasons behind the move.

Those investing in Poland seem to be primarily focused on mature companies (78%) and companies in the growth phase (57%). Only 9% are startups – investors, like Poland’s financial sector, are looking for solid and stable investments. It comes as no surprise, therefore, that 75% of M&A transactions in Poland took place in partnership with an industrial investor.

Europe’s Star Performer

Poland ranks highest economically within the region and is regarded as a star performer despite last year’s general slowdown, with almost 300 deals at a total value of around EUR 7.5 billion.

The increase in international tech hubs and shared service centres (SSCs) being relocated to this part of Europe may also contribute to the growing interest in investments in Poland. The hope is that Poland will continue to steer a stable course through the surrounding choppy waters.

For more details, get in touch with the author, Managing Partner Agnieszka Pytlas.

Originally published Spring 2024 in GGI FYI