The latest Deloitte Central Europe Private Equity Confidence Survey has revealed an industry largely undeterred by events of the last 18 months, with confidence continuing its impressive climb to reach 149.
Nearly a third (30 per cent) of respondents claim their new deal pipelines are picking up pace as they gain comfort and confidence in the backdrop, reflecting optimistic economic expectations: 70 per cent expect the economy to improve, and none expect it to worsen – the first such optimism since 2007. Less than a fifth (19 per cent) feel growth plans slowed as a result of the last 18 months, while 43 per cent are bringing forward M&A with existing (17 per cent) or new (26 per cent) targets.
“We are encouraged though unsurprised by this very positive sentiment,” says Mark Jung, Deloitte Partner and Deloitte Central Europe Private Equity Leader. “Deal-doers in the region have built up resilience and experience they can draw on for supporting management teams. Funding options remain plentiful, and growth levers such as M&A have become a proven strategy for accelerating growth in companies backed by private equity.
“Pricing is high, and this is affecting for transacting: 41 per cent of respondents feel it is more expensive to acquire businesses now than six months ago, a four-fold increase on our winter Survey. Likely as a result, the proportion of those expecting to sell more than they buy over the coming months has tripled from 6 per cent in the winter to 19 per cent now. At the same time, those expecting to buy more has dropped from 72 per cent to 57 per cent.
“The region Is now one of experienced deal-doers driving meaningful value in the businesses they back. A high pricing environment may be incentivizing divestments despite attractive buy-side opportunities in the market.”
