RISING ACTIVITY IN THE POLISH M&A MARKET

Looking at M&A transactions from the perspective of the last 10 years, we have witnessed a significant increase in interest from foreign buyers - says Nikodem Multan, one of the partners of Ecovis Legal Poland. International transactions are steadily increasing, thanks to the prosperous countries of Central and Eastern Europe offering a relatively cheap but well-qualified workforce. Moreover, several countries in Central and Eastern Europe (CEE), despite being Member States of the European Union and hence the participants of a vast market, have still not adopted the Euro as their national currency. “This is one reason why the M&A market is particularly attractive for foreign buyers from countries with strong currencies, as the valuation results in a lower price compared to the investors’ home markets” highlights Nikodem. Ecovis Legal Poland is a well-established law firm with more than 20 years of history. In recent years, Ecovis Legal Poland has worked on various multi-million-zloty Finnish investments involving production activities as well as mergers and acquisitions.They have assisted more than 50 Finnish companies starting to conduct business inPoland. Take a look at how the company views the M&A market in Poland.

How does the mergers and acquisitions market look in Poland right now? Are there any emerging trends?

The Spanish newspaper El Economista recently noted that the Polish economy “resembles a

steamroller” and is close to overtaking Spain, with the potential to catch up with Italy by the end of the decade. This is an optimistic realistic scenario. Rapid economic growth and the migration of businesses from Ukraine to Poland are driving dynamic development in the mergers and acquisitions (M&A) market. Both buyers and sellers are showing significant activity. An additional factor is that the owners of companies established in the 1990s are now approaching retirement age, often without successors, leading to the sale of their businesses. This marks a period of heightened activity on the M&A market.

What types of companies are attracting buyers from Nordic countries?

Primarily those that are ready to invest in Poland and believe in the further development of their business in our country. Ideally, they should have a well-thought-out strategy, though we can assist with that. It is worth noting that the M&A boom encompasses many sectors, so we are not limited to just a few industries. The greatest activity is coming from sectors such as healthcare, IT, manufacturing (particularly furniture), transport and logistics.

What specific features of the Polish M&A market might surprise foreign firms?

Unfortunately, the Polish market still has many badly prepared advisors. The M&A process is

complex, requiring expertise in economics, law, taxation and management, but not everyone

possesses the necessary skills. This can result in transactions being delayed, or even failing

altogether. It is crucial to work with experienced professionals. On a positive note, Poles are open, friendly and value relationships, which means that the M&A process does not have to be difficult if approached correctly.

What has been the most interesting or unusual situation you have encountered during an M&A process?

One of the more intriguing stories involved a company for which we spent six months searching for an investor, without much success. During one meeting, the client mentioned that someone from Company Y had tried to contact him. To our surprise, it turned out to be an acquaintance and a neighbor, who we had not considered due to industry differences. Their interest was genuine and the transaction proceeded swiftly and smoothly. Typically, however, you cannot rely on such luck. 

Another example involved the sale of a large manufacturing company undergoing restructuring. This process always involves a race against time and a certain dependence on courts and creditors. Although we managed to find an investor – a restructuring fund – everything was going well until one of the key directors began spreading false information. Despite our efforts to correct his statements, the transaction ultimately fell through. This just goes to show that people often represent the weakest link in the process.

What general recommendations can you offer concerning negotiations? What should be avoided?

Polish entrepreneurs place great value on professionalism, honesty and openness. This makes it unwise to engage in strategic games or conceal your true objectives – once revealed, it could jeopardise the transaction. In Poland, trust and open communication are paramount. Prolonging terms to your advantage, which may be seen as a negotiation art in some cultures, is frowned upon here. The satisfaction of both parties significantly influences ongoing relationships, and Poles are relationship-oriented, which can greatly affect the success of the entire process.

Do you have any advice on how to negotiate with local sellers or buyers?

Yes, as I mentioned, it is crucial to conduct negotiations in an open and transparent manner,

respecting the interests of both parties. This approach consistently yields the best results.

Are we currently dealing with a seller’s or a buyer's market?

The market in Poland is very dynamic on both sides, with many sellers and buyers. It is difficult to definitively identify which side is dominant, though each has its specific characteristics and challenges.

What is your best reference project?

a) A manufacturing company from outside Poland that decided to invest in a Polish firm within its own or a complementary industry; b) The expansion of foreign service companies into the Polish market – particularly in the IT sector (Polish programmers enjoy an excellent reputation) and in the rapidly growing healthcare industry.