The M&A market saw an increase in the number of transactions in the second quarter of this year. The number of deals rose to 2,841 from the 2,697 recorded in the first quarter of this year, an increase of 5.3%. The cumulative value of deals completed over the past 12 months has also increased - specifically from the original $467 billion to $576 billion. The positive development is due to falling inflation, lower euro interest rates and the generally positive situation on the stock markets. The improving economy could lead to a further increase in M&A activity in the remaining months of this year.

Together with the recovery of European economies and the growth of market confidence, the optimistic mood is beginning to strengthen. In light of these factors, the Deloitte M&A Index for Q3 expects a further slight increase in announced transactions to 3,025. "The first half of this year brought positive trends in the M&A sector. There has been an increase in the number of transactions, demand is growing, and companies with quality assets for sale are emerging on the market. Price expectations of sellers and buyers now appear to be more balanced than in the previous period. I expect that companies will continue to compete in a competitive market in the coming months to grow and develop their business models through acquisitions, and along with this, unrealized exits of private equity firms will also gradually start to materialize," says Jan Brabec, partner in Deloitte's Financial Advisory Services.

According to Capital IQ, 17 transactions took place in the Czech Republic in the second quarter of 2024, mostly small to medium-sized. For example, BHM sold a majority stake in construction and engineering firm Block Group to private equity firm CEIP. The Genesis Growth Equity I fund sold Homecare Holding, a home care business it had been developing for four years, to Penta Hospitals. HP Tronic agreed with Genesis Private Equity Fund III to buy a quarter of its shares, making it the sole owner of electronics retailer Datart. And last but not least, Aricoma, part of investment group KKCG, acquired KCT Data, while investment group Thein bought Your System, a provider of IT services primarily to the public sector.

"The European M&A market has recovered slightly in the last two quarters, mainly due to attractive corporate valuations, falling euro interest rates and a generally improving macroeconomic environment. These factors could lead to an increase in activity in the second half of this year, despite the recent turbulence in equity markets," says Miroslav Linhart, partner in charge of Deloitte's Financial Advisory Services.

In the Czech Republic, investment activity continued to be hampered by high interest rates, which the CNB began to cut gradually at the end of 2023. The worst impact on the economy was weak foreign demand, especially from Germany, with which the Czech economy is closely linked. The economic recovery has so far been lacklustre. GDP increased by 0.2% in Q1 compared with the previous quarter, or 0.3% year-on-year. Increased demand from households, supported by real wage growth, was the main support. On the other hand, business investment and a fall in inventories were weak. The difficult situation in the business sector is also highlighted by the 0.7% year-on-year decline in industrial production in January-April and an even 3% fall in construction production over the same period. The Purchasing Managers' Index and the Czech Statistical Office's confidence indicators do not indicate that the situation will improve in the coming weeks. The main positive change is the end of high inflation.