OREANDA-NEWS. November 24, 2010. According to the PwC survey “Regained confidence: mid-market M&A in Russia in 2009 – 1H 2010”, the M&A mid-market was less affected by the crisis than other types of M&A activity. Besides, the share of mid-market deals in the overall M&A market value increased from 22% in 2009 to 27% in 1H 2010, reported the press-centre of PwC.

Michael Knoll, Partner, Head of M&A Lead Advisory:
“We believe that the year will end on a promising note that will provide for a good foundation for 2011 – when we expect to see a significant increase in transaction activity.”

The PwC annual survey looks at transactions with an enterprise value of up to USD 250 million and covers the period 2009 to June 2010. The period analysed in the publication was a difficult one for the M&A market. The number of mid-market M&A deals declined to 47 in 1H 2010, as compared to 64 in 1H 2009 – almost a 27% decrease y-o-y. In value terms, the decrease was similar: the value of mid-market deals was USD 5.1 billion in 1H 2010, as compared to USD 7 billion in 1H 2009. Over the last year, the average size of a mid-market deal has slightly decreased, from USD 110 million in 1H 2009 to USD 109 million in 1H 2010.

M&A mid-market has a more balanced sector composition than the overall M&A market. In the first half of 2010 sectors such as retail & consumer, real estate, utilities have contributed most to the M&A mid-market, accounting for 45% of all mid-market activity in terms of value.

Galina Naumenko, Partner, M&A Tax Services, states:
“We believe that as the Russian economy continues its recovery, and as GDP and real disposable income gradually increase, the retail & consumer sector will continue to make up a significant share of the M&A mid-market and remain attractive both to domestic and foreign investors.”

Domestic deals still dominated in 2009–1H 2010, accounting for about 65% of the total number and 64% of the total value of mid-market M&A deals. The number of inbound deals was over 2 times higher than the number of outbound deals in this period. Since early 2010, foreign strategic and financial buyers have shown renewed interest in Russian businesses. Currently, a significant number of transactions involving foreign participation are being worked on, some of which we expect will be announced in the last quarter of 2010.