Hungary’s legal and transactional market is navigating a period defined by heightened uncertainty, shifting investor profiles, and evolving legislative frameworks, according to Lakatos, Koves and Partners Partner Szabolcs Mestyan.
"The overarching theme of recent months has been uncertainty across nearly every dimension of business activity in Hungary," Mestyan begins. “Economic, political, and geopolitical conditions are all moving targets, and no one has a crystal ball. This sentiment is reflected in transactional work as well, with closings being delayed, processes taking longer, and everything progressing at a noticeably slower pace than what the market was accustomed to.”
A second trend Mestyan highlights is a meaningful shift in the investor landscape. “We are seeing more investors coming from China and the Middle-East and Far-East more broadly, especially compared to neighboring jurisdictions,” he notes. “This is largely in line with the Hungarian Government’s policy orientation toward the East and its intention to attract capital from that direction.” The result, he says, is a market dynamic notably different from the traditional Western-capital-driven environment. “For firms like ours, trained in Western dealmaking culture, this adjustment period is both challenging and full of new opportunities.”
Despite the broader uncertainty, headline M&A volumes remain broadly within normal ranges. “Activity levels resemble those of previous years,” Mestyan observes. “We do not see extreme highs or lows, deals are happening, the market is functioning, but the tempo is different.” He notes, however, that a notable portion of current transactions appears to be politically driven rather than purely market driven, a phenomenon increasingly visible across many jurisdictions, not just Hungary.
Turning to legislation, Mestyan points to upcoming amendments to the Civil Code, particularly concerning the assignment of rights. “These updates introduce some uncertainty, as market participants are still digesting the implications.” Additionally, he expects changes to the banking legal framework, effective from January, designed to align Hungary more closely with broader EU approaches.
However, what complicates matters, Mestyan stresses, is the manner in which legislation is increasingly implemented. “Many substantial legal changes are introduced through governmental decrees rather than parliamentary procedures,” he says. “Hungary has been operating under a longstanding state of emergency for most of the past decade, and this mechanism creates a legislative landscape that is less transparent and less predictable.” From a legal-practice standpoint, this reduces the ability of lawyers to plan and advise with full certainty. “It becomes more difficult for practitioners to provide the level of specialized, forward-looking guidance that clients expect.” Still, despite these challenges, Mestyan emphasizes that the market is not stagnant, but evolving. “The environment may be complicated, but deals are still being done. The investor mix is shifting, the legislative framework is moving, and the profession is adapting.”
