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Overview of M&A activity

As a result of the covid-19 pandemic, in 2020, Portugal's economy suffered its greatest contraction since 1995, with GDP decreasing 8.4 per cent (which contrasted with the 2.7 per cent GDP increase in 2019).2

This notwithstanding, the Portuguese economy seems to be on track for recovery and the projections for 2021 are optimistic, including an estimated increase in GDP of 4.8 per cent.3

The numbers for the second quarter of 2021 confirmed these positive signs, with GDP increasing 4.9 per cent in volume compared to the first quarter of the year.4

The economic contraction in 2020 was reflected in a 22 per cent decrease in Portuguese M&A activity, although the total aggregate value of deals (considering only transactions with disclosed value) increased 5.3 per cent, almost reaching €18 billion.5

As far as transactional activity is concerned, the first wave of the pandemic has put several transactions on hold (some of which have already resumed) and has also caused the cancellation of some of them.

However, in the last 12 months some very relevant transactions took place in different activity sectors.

On the one hand, the levels of activity registered from mid-2020 until the present date show a strong resilience and capacity to adapt to the new circumstances by the market and on the other hand, some deals somehow already reflect the distress caused by the pandemic (in particular, in the hospitality and aviation sector) or, from the opposite perspective, some of the more promising areas in the future (which range from e-commerce to logistics).

International investment and private equity funds have been particularly active in the Portuguese market, and even though their interest in Portugal originated in the 2010/2011 crisis, the truth is that they have maintained a very relevant role in the dynamic of the Portuguese economy, presenting bids in most of the relevant deals in the tourism, real estate, insurance and banking sectors, even during the peak of the covid-19 pandemic.

The real estate sector continues to be the most active sector in the Portuguese M&A market, with relevant deals in all segments. In fact, real estate continued to be the sector with more M&A deals in 2020.6