White & Case Local Partner Jana Chwaszcz, Havel & Partners Partner Jaroslav Baier, DLA Piper Czech Republic Country Managing Partner Miroslav Dubovsky, and Schoenherr Partner Vladimir Cizek discuss the forces behind Czech investors increasingly looking beyond their borders, the sectors and destinations attracting the most interest, and the challenges that come with navigating foreign markets.
Riding the Investment Wave
“Despite global economic uncertainties caused by the pandemic and the Russia-Ukraine conflict, Czech investors have shown remarkable resilience and a growing appetite for cross-border investments,” Dubovsky says. “Our transaction data indicates a 15-20% increase in outbound investment advisory work since 2020.”
“The flow of Czech capital into foreign markets has clearly intensified as the Czech companies have continuously strengthened their financial as well as M&A capabilities,” Baier agrees. “Many Czech and Slovak companies, whether family-owned or institutional, now actively seek opportunities abroad.”
The Push Beyond Borders
According to Cizek, one key reason for this shift is simple: the Czech market has become too small to satisfy investors’ ambitions. “Better opportunities in focus segments abroad are a major draw,” he notes.
“Unfortunately, the primary driver behind the increased flow of Czech capital into other markets is a lack of sufficient investment opportunities within the Czech Republic,” Chwaszcz adds. “Despite having ample capital ready for deployment, the domestic market is saturated, and attractive projects of the size that would interest investors are scarce. Everyone wants to buy, but the demand exceeds the supply. As a result, investors are compelled to look beyond borders to deploy their capital effectively and achieve desired returns.”
Aside from that, Dubovsky highlights several factors that are driving this trend. “First, Czech investors have accumulated substantial capital during a period of domestic economic stability,” he notes. “The relative strength of the Czech crown against regional currencies until recently has also enhanced Czech purchasing power. Additionally, Czech companies are increasingly pursuing vertical integration strategies that necessitate cross-border acquisitions to secure supply chains and distribution networks.”
“Proximity remains an important starting point, especially when it comes to Germany, Austria, or Poland, but Czech investors are increasingly guided by strategic needs,” Baier points out. “Many are searching for know-how, new technologies, or production capacity unavailable locally. Companies are also becoming more professional and structured in their approach to foreign expansion, often relying on legal and financial advisors to reduce risk and help navigate regulatory complexity.”
The New Investment Vanguard
All private equity funds, family offices, and corporates are active, though in slightly different ways, Baier reports. “Private equity funds, both Czech and regional, are leading many cross-border acquisitions, especially in fragmented industries like construction, manufacturing, and IT,” he says, emphasizing that EPH (owned by Daniel Kretinsky), PPF, KKCG, Agrofert, and Penta Investments are particularly active. At the same time, “family offices and high-net-worth individuals are playing a growing role. These investors tend to favor strategic control and stability over rapid returns. Corporations, particularly in logistics, healthcare, and energy, are also acquiring abroad to gain scale or secure critical resources.” Last but not least, Baier says, Czech defense companies are becoming “global players and investing mostly in the US. Czechoslovak Group and CZ/Colt are key players in this field.”
“At the same time, a new wave of mid-sized Czech industrial firms and family offices is pursuing international acquisitions, often in manufacturing, logistics, or niche technologies,” Dubovsky adds. “Private equity funds such as Jet Investment, Genesis Capital, and Credo Ventures are also more outward-looking, particularly in tech, renewables, and industrial automation.”
Targets Near and Far
In terms of outbound destinations, “there is still a natural focus on neighboring markets,” Baier says. “But investors are increasingly targeting Western Europe – UK (EPH acquired last year Royal Mail, KKCG won a concession for the national lottery), Germany, France, and Italy in particular. Defense companies are active in the US. Despite current economic stagnation in Germany, Czech firms see acquisition opportunities that align with their long-term goals. In terms of sectors, activity is strongest in manufacturing, logistics, renewable energy, IT services, healthcare, as well as online delivery of food (Rohlik Group).”
“The traditional focus on neighboring V4 countries (Slovakia, Poland, Hungary) continues, but we’re witnessing expansion into Western Europe, particularly Germany and Italy, as well as Southeastern Europe (Romania, Bulgaria),” Dubovsky agrees. “The technology and renewable energy sectors have seen the highest growth in investment volume. Many clients are also pursuing carefully selected opportunities in the Balkans, capitalizing on EU integration prospects in these markets.”
“Poland has become a ‘go-to’ market due to its economic stability and growth potential,” Chwaszcz points out. “In terms of deal flow, Southeastern Europe is the next region that Czech investors are targeting. While Western Europe sees fewer investments from Czech private equity funds, once they overcome initial entry barriers and gain familiarity with the market, they tend to continue investing there.” Additionally, Chwaszcz reports that large corporates are increasingly targeting strategic opportunities globally, not just within Europe. “We are seeing major deals in the US, South America, and Asia.”
Playing the Long Game
“We’re seeing a clear shift toward long-term strategic positioning. While return on investment remains important, Czech investors increasingly seek market access, technological capabilities, and brand acquisitions that complement their existing operations,” Dubovsky notes. “This trend accelerated during the pandemic as supply chain vulnerabilities became apparent. Companies now prioritize establishing operational footholds in key markets rather than pursuing purely financial returns. This reflects the maturing of Czech capital and its increasingly sophisticated deployment.”
“For large corporates, strategic opportunities remain the main incentive for pursuing deals abroad,” Chwaszcz agrees. “These firms are focused on sustainable growth and market diversification. In contrast, for PE investors, the motivation is primarily return-driven. However, PE teams are also increasingly looking into targets that fit well into their existing portfolios, seeking not only returns but also synergies and strategic alignment.”
The Fine Print of Foreign Expansion
“Foreign expansion often brings legal and regulatory complexity,” Baier says. “Differences in tax regimes, labor law, compliance, and even deal structuring norms can present unexpected obstacles. Cultural understanding also matters – timelines, negotiation styles, and due diligence expectations vary by jurisdiction. From a commercial perspective, increased activity of some Czech investors was considered sensitive in some of the countries (UK, US). However, Czech investors have earned their respect and will certainly continue to do so in the years to come.”
“One example still includes regulatory permits, such as FDI, e.g., two FDI regimes in Hungary, or even enforceability of corporate structures – for instance, convertible bond structures,” Cizek adds.
“The most significant challenges involve navigating foreign investment screening mechanisms, which have intensified across Europe since 2020,” Dubovsky also highlights, adding that “compliance with ESG requirements presents another hurdle, as standards vary significantly between jurisdictions. For investments in non-EU countries, currency controls and repatriation restrictions often complicate deal structures. Post-Brexit investments in the UK introduce new regulatory complexities. We also see challenges around navigating local labor laws when restructuring acquired businesses and adapting to different corporate governance frameworks, particularly in Western European acquisitions.”
“Investors should first understand the basic business culture and how business operates in the given region,” Chwaszcz points out. “This cultural understanding needs to be accepted by the investor even before the venture itself. For instance, while issues in markets like India or South America can be particularly challenging due to different regulatory landscapes, the actual business practices can be even more confusing. Generally, we do not encounter major issues for investors within Europe. However, certain political changes in the region are perceived as worrying and are not welcomed by investors. For example, there are concerns about whether EU law provides sufficient comfort regarding investment protection. Nevertheless, if there is one particular point to emphasize in terms of challenges, it is that FDI rules can be more stringent and hard to navigate, as local regulations can differ significantly both globally and even within the EU.”
This article was originally published in Issue 12.7 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
