In a deal-free first quarter, the financial crisis that changed investors’ views and emptied traders’ wallets has been the bump in the local M&A activity. Experts interviewed by Wall-Street identified the underlying reasons of this blockage and the factors in sight that will get the local market back up and running.

Forecasts on the end of financial crisis, still a puzzle

In the first four months of 2009 the local M&A market has moved on ice, with an acute lack of corporate deals. Market specialists are not optimistic as to when will the market heat up the ice-cold environment, as long as the uncertainty sentiment makes forecasts difficult.

The revival of the market is conditioned both by the recovery of economic and financial climate as well as the resumption of corporate financing.

“We are witnessing a vicious circle: the deterioration of the economy triggers severe problems in the banking system that is not willing to ease lending on low visibility regarding the performance of portfolios and provision. The lack of lending, the primary driver of the economic growth over the past few years in Romania, will generate a even more acute deterioration of the economy in view of sluggish demand”, said Matei Filipidescu (photo), associate of Raiffeisen Investment Austria.

The majority of the analysts laid their odds on a recovery starting the second half of the year, he continued, due to the economic climate, lending and reduction of the gap between asking price and buyers’ price, but also due to deeper distress affecting companies, which will drive many of them in the hunt for exit solutions by drawing an investment fund.

The factors that will set the Romanian M&A market in motion are first of all the improvement of the international, regional, fiscal economic climate coupled with prompt fiscal and political decisions.

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