Private equity funds are currently looking at companies with a market value of between 5 and 30 million euros, because the number of large companies (valued above 100 million euros) that are possible takeover targets is falling, believes Mihai Sfintescu, the general manager of Abilito Capital M&A consulting firm.
The domestic market last year witnessed almost 70 deals, according to ZF estimates. Of these, only 12 deals involved more than 100 million euros.
Sfintescu, the former manager of the corporate finance arm of CA-IB, the current investment banking unit of UniCredit Romania, entered the field of consulting services to particularly target entrepreneurs who already hold businesses or plan to start new enterprises.
"I believe the market of companies worth between 5 and 30 million euros is now more active. As regards large companies, there are very few left for sale in Romania, and the process in that case takes more time," says the general manager of Abilito Capital.
Sfintescu says he has customers operating in various sectors who want to sell their businesses to investment funds or strategic investors, both partially and entirely. However, as a rule entrepreneurs remain at the helm. The sectors expected to continue to see intense activity over the following period include the IT and constructions sectors.
Most entrepreneurs who use the services of an acquisition-consulting firm run businesses that have reached maturity and require a partial or total exit to recoup invested capital.
"Funds improve companies' management, which becomes more organised," states Sfintescu. The acquisition is generally followed by a period of 3-5 years when the business is strengthened and prepared for sale".
"Now, the demand is greater than the supply, whilst margins are still high, which is why there isn't any recognisable competition right now. In time, competition will become tighter, which is why entrepreneurs should start to invest in quality and volume," states Sfintescu.
The role of an M&A consulting firm remains complex, but includes marketing for investors, the evaluation of a deal, negotiations, and the drawing up of sale documents.
Sfintescu maintains specialised firms gain between 1% and 2% for deals worth above 100m euros and between 2% and 3% for sums in excess of this mark.
He also adds that a private-equity boom is visible in Romania, which started in 2004.
The most active investment funds on the Romanian private-equity segment include 3i, the biggest fund manager listed in London, Advent International and the specialised funds of Groupe Societe Generale.
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