Corporate marriages in mid 2009. Private equity funds expected on negotiation table

The value of merger and acquisition deals in Romania will reach 3 billion euros in 2009, down by 50% compared to last year, according to Marius Stancescu, chairman of Riff Holding International, recently entered in the local market after the takeover of Sunbelt franchise through which it expects deals worth between 10 and 50 million euros, even if it is currently assisting a 150-million euro deal.

Marius Stancescu estimates an increase in the number of deals, with lower per-deal values but with a longer time frame until closure: 9-12 months, compared to 6-9 months.

If 2008 was marked by emergency, Stancescu notes, the local M&A market being an industry still highly dependent upon the circumstances rather than upon the economic reality, 2009 will be the year of reorganizations in M&A industry. “In 2009, the M&A market will be marked by the effects of a reshuffle of demand and supply. Actually, it will become a market of buyers, which is fair in a stable economy with predictable, evaluable economy”, Marius Stancescu told Wall-Street.

A year ago, Riff Holding International was the financial advisor in due diligence and audit in the sale of Eurisko to CB Richard Ellis. Moreover, in one of the largest deals of 2008, Eurisko’s advisors were Capital Partners and Biris Goran law firm, CB Richard Ellis being assisted by Badea Clifford chance and Pricewaterhouse Coopers.

As Stancescu states, the turning point when vendors lost their leverage in buyer-seller relationship was in October-November 2008, but now, especially in Central and Eastern Europe, Ukraine and Turkey, large amounts of money will be pumped into the market, in the context of great opportunities arising in these countries which will draw capital as Czech, Hungary and Poland did in last years.

“As for Romania, the politic-economic situation is not favorable for any major investment. The market will weaken. There are not even companies left to privatize, thus, nothing of great interest to give out optimism”, explained the head of Riff Holding International.

According to a Thomson Reuters study, the withdrawn M&A deals totaled 322 bln dollars in fourth quarter alone, nearly equivalent to value of those completed. Another study published by UBS reveals that a third of the deals scheduled for 2008 in US collapsed.

Even if there is no report to provide the approximate value or the number of frozen deals last year in Romania, Marius Stancescu says local market has nothing in common with the US or Western European markets. “I believe the utmost negotiations that started successfully last year will collapse in 2009. The incentive will turn into lack of interest,” Stancescu added.

Riff will broaden its service pool with a new business line, namely brokerage business service, aiming to broker both the acquisition and mergers of companies.

“As fresh franchisee of Sunbelt, we’ve postponed several mandate assignments. Now, we are concluding 5 mandates for 4 small deals (3-10 million euros) and of over 150 million euros”, Stancescu added.

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