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mergermarket’s publications division publishes the TMT in Central and Eastern Europe M&A report

Survey shows that 62% of respondents believe that TMT M&A activity in the CEE will increase over the next year

London, (17 July 2008) --- Remark, the publications and market research division of mergermarket, the London-based independent mergers and acquisitions (M&A) intelligence service published its TMT in Central and Eastern Europe report today in conjunction with CMS, the leading European legal services organisation. In researching the report, mergermarket conducted a straw poll amongst senior TMT executives from leading Western and Central & Eastern European Technology, Media and Telecommunications firms as well as private equity practitioners who had undertaken an acquisition in Emerging Europe in the past three years. The survey aims to uncover leader sentiment on TMT M&A activity in the region, in particular, the experience surveyed companies have had in respect of IP auditing and outsourcing target operations post-merger.

Key findings from the survey include:

• The majority of respondents are generally positive about TMT M&A prospects in the CEE/CIS region, with 62% of those surveyed expecting that deal flow will increase. Furthermore, 72% of those surveyed note that the credit crunch will either have a positive or neutral effect on levels of regional TMT activity.
• Respondents cite Russia as the country, which will witness the majority of TMT M&A activity over the next 12 months, closely followed by Poland and the Czech Republic. At the opposite end of the spectrum, Croatia and Slovakia are not considered likely to witness the most significant level of TMT M&A activity in the region.
• Respondents agree that M&A deals in the emerging European computer software segment will likely see the most M&A activity over the next year. The other hot areas for M&A are advertising and TV broadcasts. However, respondents were generally less optimistic about activity in the publishing, computer semiconductor and radio broadcast sectors.
• 60% of respondents believe the region’s economic growth prospects are driving M&A growth, while the current consolidation trend in the market is cited by a further 13% as a positive factor affecting M&A flow. Additionally, respondents generally trust that accelerating economic expansion will have a myriad of positive knock-on effects, such as the “growing demand for complex tech solutions and very strong advertising markets.”

Respondents’ opinions on prospective TMT deal flow broadly complement historical M&A trends. CEE TMT transactions underwent a mild downturn in terms of values and volumes during the first two quarters of 2008 – in slight contrast to respondents’ bullish sentiments on future deal flow. However, their attitudes on which CEE countries would lead TMT acquisitions match trends between Q1 2007 and Q2 2008 – Russian, Polish and Czech deal flow accounted for 63% of overall deal volumes and 62% of valuations over this period.

Additional findings include:

• 33% of respondents believe that regulatory issues are the most significant obstacle to conducting M&A activity in the region, “especially in Russia and the Ukraine.” Political issues and uncertainties surrounding the region’s markets are also viewed as hindrances to M&A activity, by 20% of respondents in each case.
• The majority of respondents (64%) did not undertake an IP audit following their most recent merger, with one respondent saying that “it was not required.” However, a sizeable 36% did so, with one respondent noting that “the IP audit was part-and-parcel of a general audit.”
• 80% of respondents believe that IP rights are an important issue. Furthermore, 63% of respondents went on to say that they could consider conducting an IP audit in the future following an acquisition.