Analysing M&A in Bulgaria

ACQ Magazine spoke to Galina Bunkova and Ilya Komarevski Managing Associates at Tsvetkova Bebov & Partners, and asked them to evaluate what has been happening in the M&A market in Bulgaria as of late. The company is a business law firm, specialised in deal-focused and ongoing support of local and international businesses.


How would you evaluate M&A and Private Equity in Bulgaria throughout 2010 so far?

Traditionally, Bulgarian M&A market is driven by forces and players located outside Bulgaria. The impacts of the global economic downturn became visible in Bulgaria in the late 2008. Again, the drivers were brought from abroad, the most visible among them being the reduced availability of financial resources for the local banks (most of them controlled by EU banking institutions).
The number of international and domestic M&A transactions has dropped dramatically reaching levels of less than 10 per year. Currently there are some signals for a market revival, however, a stable trend is yet hard to define.
Most of the transactions, which took place in 2010, were either a result of some larger scale international acquisitions, while some of the rest were typical disposals of business assets resulting from changes in the strategic focus of the headquarters. More than 50% of the acquisitions were made by strategic investors, whilst only a few of the regionally known Private Equity Funds have kept their eye on the Bulgarian market.

What effects has the recession had on the market?

Apart from reducing the scale and number of transactions, the recession changed dramatically the nature of the driving forces of the M&A transactions. Whilst in the past most M&A deals were seen as an instrument for growth, markets expansion and domination, the latest deals are often being described as disposals of distressed assets, strategic restructuring steps, etc.

What predictions do you have for the market for the remainder of the year and into 2011?

This is still hard to predict with a reasonable degree of certainty. It is true that lately we see some increasing interest from the strategic players and some longawaited privatisation deals are back on track, however, long-term perspectives are still not certain. Some expectations are focused on the private equity and financial investors, as these are expected to return to the market, as an alternative to reduced availability of bank financing.

How do you feel Bulgaria has fared when compared with its neighbouring countries?

Bulgaria is usually compared to Romania, as both countries have similar social and economic background and joined EU together back in 2007. Nevertheless Romania is a much larger market (its population being 3 times bigger) and thus – a much more visible investment destination. Bulgaria though, is often perceived as a more financially stable economy, since the government managed to keep the fixed exchange rate of the local currency to the EURO.

Have you been involved in any significant transactions recently?

Recently our team advised a potential buyer of the largest Bulgarian Utility Company (Sofiiska Voda), previously controlled by United Utilities, UK and a bidder for a majority stake in a power plant held by ENEL - Italy. Some smaller size transactions and restructurings were advised as well.

Please give us some information about Tsvetkova Bebov and Partners.

We have always emphasised on the quality of our advisory work, delivering comprehensive reports and clear ideas on the legal matters discussed. Our team has more than 10 years of joint experience in advising local and international businesses. We strive to understand the specifics of our client’s businesses by cooperating closely with client executives and avoiding one-sided “legalistic” approach to the complex business issues.
We provide legal advice and assistance in all legal aspects of mergers, takeovers, divisions, spin-offs, asset sales, enterprise sales, and changes of legal form of business entities. We are specialized also in all legal aspects of acquisitions and disposals of shares and assets and gained wide-range expertise in the field of joint venture transactions as well.
Apart from the purely M&A related work, our law firm is also specialised in banking and capital markets, real estate and construction, energy and natural resources, intellectual property, competition, employment law and civil and commercial litigation.

Analysing M&A in Bulgaria