In 2014, the bulk of larger acquisitions in the Baltics are expected to be performed by strategic investors (as in the last few consecutive years). Activity by strategic investors is also stimulated by the fact that following recovery of Baltic economies local companies have accumulated additional funds and financing conditions have improved. All this should encourage companies to invest in development, acquisitions and technologies.

With regional private equity funds becoming more active, the number of smaller transactions should grow in 2014 as well. On the other hand, companies attracting private equity funds and successfully using them for development often turn into attractive targets for strategic investors. This facilitates larger transactions and the emergence of Baltic companies in the international arena.

The positive performance of the M&A market was largely due to a positive response by market participants to economic growth in the Baltic States, belief in a positive economic outlook and the future of the companies acquired, as well as an improving mood in the Eurozone. In 2014, the mood in the Baltic region is likely to remain optimistic and encourage development, which in turn should contribute to more active and bolder steps in planning and implementing mergers and acquisitions. According to the results of asurvey of over 100 companies carried out by SORAINEN in all three Baltic States in September 2013 in cooperation with Verslo žiniosDienas bizness and Äripäev, nearly two-thirds of respondents would seriously consider expanding their business through acquisition of other companies.

Changes in the number of disclosed M&A transactions in the Baltics (Lithuania, Latvia and Estonia) in 2007-2013

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The number of larger transactions (with an indicative value exceeding USD 5 million) in Lithuania grew by a third in 2013 compared to 2012 (from 15 transactions in 2012 to 20 transactions in 2013). In this regard, Lithuania nearly caught up with Estonia (21 transactions last year) which was a clear leader in the Baltics in terms of the number of transactions in 2012 (26 transactions or 54% of all transactions in the Baltics). Latvia saw an even more marked increase in the number of transactions, which surged 60% year-on-year. The rise in the number of transactions in Latvia was stimulated by euro adoption and an improvement in the general economic situation in Latvia.

Changes in the number of M&A transactions by country in 2011-2013

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TOP 10 M&A transactions by disclosed sale price in the Baltics (Lithuania, Latvia and Estonia) in 2013

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