CMS Partners Horea Popescu and Alexander Rakosi unpack a standout year for CEE M&A, as the region posted a record number of deals and a sharp rise in aggregate values despite a muted start to 2025 amid overall geopolitical headwinds.
CEELM: Looking back at 2025, what do you think drove the strong deal activity and surge in overall deal values across CEE?
Popescu: I think CEE had a very strong year overall. We did not expect 2025 to be exceptional, given the ongoing war in Ukraine and the year starting amid new US tariffs. Political changes across parts of CEE also weighed on sentiment in the first half, and the overall atmosphere was not particularly encouraging. That said, the year ultimately proved outstanding – the growth in both deal volume and size of deals made it one of the strongest years on record, reaching an unprecedented high.
Rakosi: Resilience was one of the defining themes. A key driver was market consolidation amid volatility across various markets. We also saw several mega-deals in the banking and financial services industry, which created meaningful ripple effects across the region; even without those, the broader landscape remained very strong.
Popescu: In 2025, the region reached a record number of deals, more than 1,500, representing an increase of over 22% compared to 2024. Even more significantly, deal value rose to over EUR 36 billion, an increase of more than 42%.
CEELM: Which sectors stood out last year in terms of activity or value, and were there any surprises?
Rakosi: In terms of value, finance and insurance led the way. The Erste Bank transaction was particularly significant and had a major impact on both overall value and the prominence of the sector. Beyond the headline transaction, it signals a strong commitment to the region as a financial services market, and we continue to see cross-border investor appetite in financial services deals, including in less high-profile transactions.
Healthcare also stood out, and we expect to see more activity at the intersection with private equity. In addition, manufacturing and industrial M&A increased notably, not only due to geographic expansion, but also because of automation initiatives and broader digitalization efforts.
On the energy side, perhaps contrary to recent years, activity was somewhat lower. At the same time, AI and digitalization continued to drive transactional activity and will likely remain important going forward.
Popescu: We also saw increased activity around battery storage, which is critical for enabling renewable projects, both those already operating and those under construction, to integrate more effectively into national energy systems and markets.
Telecoms and IT are also having, and will continue to have, a significant impact. The sector saw a material increase in both volume and size, with more than 280 deals, and we expect it to remain at the forefront of investor activity in the coming years.
CEELM: How did individual CEE countries perform, and were there any trends or developments that stood out?
Popescu: Poland, as usual, stood out as the leading market in the region. There was a significant increase in both deal volume and deal value. The market recorded 331 deals last year, a 23% increase compared to 2024, and the total value of deals was EUR 13.76 billion.
Romania also stood out in terms of volume, with 272 deals, a 45% increase, despite a year marked by political turmoil and elections, which added a further layer of perceived instability. Those concerns were compounded by tax increases implemented in the second half of 2025. Even so, the results confirmed the underlying strength of the economy and demonstrated that investor appetite can remain high even amid political change.
Finally, the Czech Republic also saw a significant increase, primarily due to the EUR 4 billion Zentiva sale, but also because the number of transactions jumped by more than 50%.
Rakosi: Beyond the largest markets, several jurisdictions also performed very well. Serbia saw an excellent increase in volume and almost a 280% increase in deal value to just over EUR 1.73 billion. This shows that the region continues to offer attractive assets and that activity does not necessarily stall due to broader geopolitical factors.
Slovenia also recorded almost a doubling of transaction volume and a solid increase in value. Overall, results ranged from strong to even spectacular across multiple jurisdictions.
CEELM: Did cross-border transactions play a significant role in the region, and what trends did you observe in international investor interest?
Rakosi: Cross-border activity remains a major driver of deal-making. The usual suspects were again prominent: the US, the UK, and Germany, with Austria also ranking highly, largely due to the Erste mega-deal. At the same time, we are seeing increased intra-regional cross-border investment, with CEE-based players investing in other CEE jurisdictions.
Popescu: Cross-border deals were a significant factor, accounting for over 80% of total investment value and over 60% of deal volume. It is clearly the largest component of the market. Intra-regional investment is a definite trend, for example, Hungarian and Polish investors investing in Romania, and we have also seen renewed appetite from Austrian investors in CEE, perhaps even more visibly than from Germany, where outbound appetite softened due to broader economic challenges.
CEELM: How has private equity activity evolved in CEE, and which sectors or strategies are attracting the most attention?
Rakosi: Private equity continues to be very active. We can report an all-time high in both transaction volume and deal value. Volume increased by around 18%, and value rose by 24%. This shows appetite for large-ticket PE, but also reflects a very active regional ecosystem of PE players evaluating opportunities across multiple jurisdictions.
Popescu: Increased PE activity reconfirms that there are strong targets in the region with meaningful growth potential and profitable foundations. Healthcare is becoming a critical segment, and we are also seeing PE in manufacturing and IT. Across the board, there are quality assets with clear development potential, which support the broader narrative of the region’s strength.
CEELM: Looking ahead to 2026-2027, which markets or sectors do you feel most optimistic about, and where do uncertainties remain?
Popescu: There are political challenges in 2026 as well. We have already seen elections in Poland and Romania, but the economies were not materially impacted. This year, Hungary and Bulgaria will also have election cycles, and we hope these will have a neutral or positive effect. Bulgaria’s entry into the Eurozone would be a major step for the country.
We do not see any clear showstoppers that would significantly reduce M&A activity. The start of 2026 and the deal flow we are seeing confirm that the market remains on track. The sectors that have generated substantial activity in recent years should continue to do so, particularly IT and software development, as well as energy and energy storage. While 2025 may have included some short-term disruptions, many investments are now moving from the project phase into financing and development, and we expect increased movement, especially as countries push to meet renewable energy targets.
Rakosi: There are some concerns that inflation may remain an issue, which could impact labor costs and elements of competitiveness, but that is not unique to any one country. We still expect resilient deal activity, particularly in healthcare and also in defense-related transactions. Defense can be difficult to categorize – it often sits within manufacturing and industrials, but it is clearly an area where we see momentum, with more players becoming active in defense-adjacent industries.
Popescu: We also expect to see more investment through joint ventures with states, as well as standalone investments in defense-related facilities, whether dual-use or purely defense-focused, particularly as the SAFE program develops further. The program is still in its early stages, but the headline numbers are strong, and it remains to be seen how that translates into market practice.
This article was originally published in Issue 13.1 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
