Against a challenging geopolitical backdrop, renewed foreign investor interest, sectoral resilience, and emerging structural deal drivers have combined to put Estonia and the wider Baltics firmly back on the M&A map, according to Sorainen Partner Toomas Prangli, who notes that, after a subdued period, the Baltic transactional market has staged a clear and confidence-driven rebound.
"2025 ended on a very strong note for both law firms and the transactional market across the Baltics, including Estonia," Prangli begins. "Deal count and overall deal volume reached their highest levels in recent years, marking a clear comeback after a relatively subdued period. This rebound has been driven primarily by renewed foreign-investor confidence, even against the backdrop of ongoing geopolitical tensions linked to the war in Ukraine."
According to Prangli, increased government spending on defense has also played an indirect role in restoring confidence. “We are seeing foreign investors returning to the market, particularly toward the end of the year,” he says, noting that momentum has been especially visible over the last two to three months.
As for the sectors driving this activity, Prangli first points to technology as a central pillar. "I expect to see a growing number of tech exits in Estonia and across the Baltics more broadly," he says. "While venture capital investment has not yet returned to the peak levels seen in 2021 and 2022, many companies funded during that earlier boom continued to grow through the downturn and are now reaching exit maturity. "A notable example is the sale of Estonian AI company Ready Player Me to Netflix, which Prangli sees as a potential early signal of a broader exit cycle. “Many of these companies have quietly matured over the past few years, and exits are now starting to materialize."
Furthermore, Prangli notes that defense technology has become an increasingly prominent theme, particularly in the venture-capital space. "A number of defense-focused companies are emerging as attractive acquisition targets, and I expect this trend to continue." Prangli also highlights Estonia’s role as a regional hub for Ukrainian defense-tech teams. “Many Ukraine-origin teams are choosing Estonia as their base to incorporate, scale, and access the wider EU market,” he says. "This has further strengthened Estonia’s position as a defense-tech ecosystem with international relevance."
Continuing, Prangli draws attention to the newly launched Baltic Innovation Fund III. "At the beginning of 2026, the launch of the fund marked an important development. Structured as a fund of funds and backed by the Baltic governments together with the European Investment Bank, its goal is to stimulate venture capital and private equity activity across the region." While the Baltics already have a relatively solid VC ecosystem, Prangli notes that private equity remains underdeveloped. “There are only a handful of pan-Baltic PE players, and not all of them are currently active,” he says. "The new fund is expected to help close this gap and bring greater depth to the regional PE market."
Finally, Prangli highlights the rising trend of generational change in family-owned businesses. "This is emerging as an important trigger for transactions and is, in fact, a broader European trend," he says, noting that it is particularly relevant in Estonia, "where private wealth accumulation largely began in the 1990s." As a result, many founders are now approaching their first major generational transition. “The first generational change is always the most critical,” Prangli argues. “If succession is not structured properly, businesses often become targets for private equity or strategic investors.” Given the timing of wealth creation in the region, he expects this dynamic to drive deal activity across Estonia and the Baltics for years to come.
