The following Q&A is an extract of the May 2021 edition of the Private Equity Trends Monitor, which provides you with an up-to-date overview of the latest and anticipated trends across the European private equity sector. This extract covers private equity deal activity in Central and Eastern Europe.
How has COVID-19 impacted deal flow in the CEE private equity sector?
PE and other deal flow has accelerated in Q1 2021, particularly in the mid-market segment. PE and founder-owned businesses that have been resilient during the pandemic are being put up for sale.
Do any particular industries in CEE seem to be insulated from the adverse economic effects of the pandemic?
Technology, FMCG, online and traditional food retail and education are among the sectors attracting the most interest. Also, alternative energy and infrastructure continue to draw significant interest from infrastructure funds and asset managers.
Are downward economic protection clauses / measures (including MAC clauses) becoming more prevalent in transaction documents?
In the mid-market segment, MAC clauses or other CPs protecting against significant economic deterioration, and completion account adjustments protecting against less significant economic deterioration, are more prevalent than in pre-pandemic times. In the larger, competitive auction processes or transactions involving global PE players, as usual there are fewer downward economic protections.
Are you seeing any distressed deals so far?
There have been some distressed deals, but so far there has been more talk about distressed deals than actual distressed deals. This may be a result of the legal systems in CEE, which generally make it difficult for lenders to move quickly and effectively in distressed situations.
By Rob Irving, Partner, Piotr Dulewicz, Partner, Petr Zakoucky, Managing Partner, and Perry Zizzi, Managing Partner, Dentons