Deloitte: 20% of deals started are on hold

“It has to do with the subprime crisis. Most of our customers are multinationals that are being affected by market conditions, particularly investment funds that specialise in real estate. They are more watchful; more acquainted with the situation and are no longer willing to pay any price to buy. In the past six months, I’ve seen as much as 20% of the deals in which we provided assistance put on hold. We did not witness this phenomenon last year,” said Antonis Ioannides, partner M&A transaction services financial advisory of Deloitte.
On the other hand, real estate deals have plunged in 2008, a trend that became visible as early as the second half of last year.
“The M&A market has changed. Last year, at least 40-50% of our deals were in the real estate field, while this year’s percentage stands at only 10%. Last year, everything was for sale. Everybody bought everything. This year, people are more selective. Sellers are sticking to their expectations and buyers are reluctant to pay these sums,” added Ioannides.
Some of the investors who raised money for projects in Romania have withdrawn and headed to states such as Germany, where they can get better yields.
A lot of investors that focused on real estate have started to shift their money to other sectors that will support economic growth in the coming years, believe Deloitte consultancy representatives.
Ioannides maintains productive sectors will support the expansion of the M&A market this year in the context where real estate deals will follow a visible downward trend.
The falling value of deals this year, heralds the entrance of a new stage of consolidation “in all dynamic sectors”, believe Deloitte officials.
“Romanian companies still lack the necessary size for us to see intra-national consolidation. We’re still witnessing many takeovers by foreigners,” explained Ioannides.
From the standpoint of the consulting services market, all these deals are making the M&A sector more interesting compared with 2007.
At present, the most attractive investors for consultancies are foreign ones, as they are the ones that offer the biggest number of contracts on the sell side.