Despite global uncertainty and geopolitical shifts, South East Europe’s merger and acquisition (M&A) landscape is shaping up to remain solid, with steady investor appetite and domestic dealmaking to stay active. But what are the key trends shaping the market and what should businesses be preparing for next?
Transaction Services Partner, Stela Ivanchova provides insight.
Stability today, moderate growth tomorrow
The outlook for domestic M&A in the next 12 months remains positive. Deal activity has been steady, and whilst no dramatic shifts have taken place of late, the long-term trajectory signals increasing significance of local M&A as regional economies mature.
In fact, expectations for the coming year suggest a moderate increase in domestic M&A investment, supported by healthy macroeconomic conditions that have characterised the region for the past couple of years, conditions that are expected to persist in 2026.
Cross border deals – minimal turbulence
Cross border M&A has remained strong in the market, especially from European investors, with Central Europe driving much of the inbound activity. Importantly, geographical tensions have not significantly impacted these deals so far, and cross-border activity is not proving difficult for most investors. There are however concerns which remain particularly around; cultural and talent, access to finance, bureaucracy and inconsistent legislation, and cross border tax issues. These challenges reflect the region’s continuing structural gaps compared to more mature EU markets, including underdeveloped infrastructure and administrative hurdles.
However, investors continue to view the region positively as a strategic opportunity, with most clients focusing their search for acquisition within the domestic market and wider Europe.
Valuations and deal dynamics: A buyer’s market emerging
Dealmakers across the region are reporting that the biggest hurdles in completing transactions over the past year have been valuation alignment and finding the right acquiror. Valuations have moderately decreased, forming what is increasingly a buyer’s market. A key factor behind this trend is the wave of privately owned businesses coming to market, often driven by succession needs but whose small scale can make them less attractive to larger international investors.
Changes in interest rates and deal volumes are also influencing valuation behaviours, making tools like earnouts more common as a way to bridge valuation gaps.
What’s driving M&A demand?
Across the region, buyers are motivated by several clear strategic priorities which include access to new customers and markets, strengthening supply chain and distribution, talent and capability acquisition, and responding to limited growth opportunities in the home market.
For many acquirors, securing controlling stakes remains the preferred option, reflecting the regions investor profile, strategic buyers and private equity houses who favour active ownership roles. Private equity continues to strike a balance between new platform acquisitions and bolt-on deals, with portfolio fit and strategic alignment acting as the key considerations for any new investment.
Looking ahead
For businesses considering an M&A process within the next couple of years, preparation will be key. There is a vast difference between the smoothness of a transaction due to how well-prepared the seller is. Some key tips we would advise is:
- Invest in sell-side readiness to streamline due diligence
- Understand investor expectations, particularly around growth and performance KPIs
- Develop a transition or management handover plan, especially in founder-led businesses
- Address structural or organizational challenges early to maximise valuation and appeal
While the region faces challenges, particularly around funding availability, taxation and bureaucracy, the overall picture remains encouraging. Stable macroeconomic conditions, steady investor appetite and emerging high-growth sectors are creating compelling opportunities for both buyers and sellers. With thoughtful preparation and strategic positioning, businesses in South East Europe can navigate the evolving M&A environment with confidence as they move into 2026.
