The sharp decline in the Central European private equity market index, which lasted for 12 months, has stopped. Instead, we can observe a slight but crucial increase. With it comes a slight optimism on the part of investors, who believe that 2023 is a good time for private equity investment. This is according to the latest Central Europe Private Equity Market Confidence Survey.

Our traditional Central European Private Equity Market Confidence Survey has been tracking the changing sentiment of the Central European investment community every six months since 2003. With the 40th edition, for which we collected data in December 2022, we are also celebrating 20 years of the survey.

• The sharp decline in the index has stopped after 12 months and there has been a slight but substantial increase. The index, which now stands at 67 (29 points higher than in the summer of 2022), reflects improved sentiment and moderate optimism. So far, 2023 looks like an ideal time for private equity investment. More than 80% of investors are convinced of this.
• Confidence in the efficiency of investments is growing, with a third of investors expecting an increase (compared to only 8% in the previous survey). In contrast, only 14% of investors expect a decrease (compared to 27% in the previous survey).
• Nearly two-thirds (64%) of the retailers surveyed believe that the first half of 2023 will be marked by price reductions. Respondents remain consistent in this, with their expectations unchanged from the summer survey.
• On the issue of debt financing, 67% of respondents expect a reduction in liquidity in the first half of 2023.
• In challenging conditions, investors typically take a more cautious approach to investment. This is also why only 40% of respondents expect to focus on new investments in the coming months. Around 50% of respondents want to focus more on portfolio management and looking after existing investments.
• Approximately 38% of respondents expect the average value of completed trades to decrease. More than half (55%) of respondents expect the size of transactions to remain the same.
• Due to continued uncertainty, the largest players in the market will also remain the most desirable businesses, as more than half of respondents (53%) believe.
• More and more businesses are making ESG commitments. In the current survey, more than one-fifth of respondents have signed up to them and taken concrete steps, up 50% from June 2022.
• IT is still considered one of the drivers of business. Only nearly 2% of respondents do not see the potential of technology for their current portfolio.

“The market has seen an unusually high number of shocks in just three years, with the post-pandemic recovery giving way to inflation and interest rate rises causing investors to pause and reflect. In our Survey’s 20 years we have seen that each shock is followed by a rise in confidence, economic conditions, and transacting, so we trust the region’s investors to draw on their experience to help businesses remain resilient and embrace opportunities for sustainable growth in today’s backdrop.”

-Dusan Sevc, Deloitte Partner and Private Equity Leader