The M&A market in Cyprus has experienced robust and dynamic growth

In recent years, the M&A market in Cyprus has experienced significant activity, attracting both international and local investment. To shed light on this trend and delve deeper into the subject, we sat down with Christophoros Anayiotos, Head of Deal Advisory, KPMG Cyprus, and an expert with extensive experience in the Cyprus M&A market. In this interview, Christophoros Anayiotos shares insights into the factors contributing to the growth of M&A in Cyprus, future trends, the benefits of M&A for local businesses, challenges hindering M&A activity, and the crucial role of local advisors in facilitating successful transactions.

How has the M&A market in Cyprus evolved in recent years, and what are the key drivers behind its growth?

The M&A market in Cyprus has experienced robust and dynamic growth. Strategic drivers have played a pivotal role in this development. Firstly, businesses utilise M&A to enhance operations, streamline processes, access new markets, and diversify their offerings. Bolt-on acquisitions have been pursued to rapidly increase market share and consolidate industry presence. Technology acquisitions enable companies to stay competitive and meet evolving customer demands. Lastly, geographical expansion allows companies to establish a presence in untapped markets. These drivers have fuelled the emergence and growth of the M&A market in Cyprus.

What trends can we expect for the future of M&A in Cyprus, and which sectors will witness increased activity?

Despite the short-term macroeconomic challenges, we anticipate strong M&A growth in the market. The energy sector, particularly renewable energy and sustainability are expected to witness increased activity due to environmental concerns and government initiatives. The technology sector will experience a surge in M&A deals as businesses leverage digital transformation and innovation. Healthcare, FMCG, education, and hospitality sectors will also probably see heightened activity due to evolving consumer demands, market consolidation, and globalisation. These sectors present attractive investment opportunities and synergistic potential, making them prime candidates for M&A transactions in Cyprus.

Why should local businesses consider M&A as part of their strategic objectives?

One of the significant advantages M&A offers is the potential to serve as a viable exit strategy for existing shareholders. Family-owned businesses often struggle to realise the full value they create for the family. However, embracing M&A allows these businesses to monetise their investments and unlock significant value. Beyond its exit benefits, M&A offers various advantages, such as gaining a competitive edge through synergies and operational efficiencies, accessing new markets, diversifying offerings, and integrating talent and advanced technologies. By recognising the value of M&A and incorporating it into their long-term planning, local businesses can position themselves for accelerated growth, increased competitiveness, and a favourable outlook in the dynamic business landscape.

What challenges hinder M&A activity in Cyprus, and how can they be overcome?

M&A activity in Cyprus faces challenges like inadequate strategic fit assessment, cultural integration issues, and a lack of awareness among businesses about its benefits. Engaging experienced advisors for elaborate due diligence can address these hurdles. Additionally, the scarcity of private equity investors, and lack of liquidity create difficulties in establishing clear exit strategies. Attracting investors and creating an environment that encourages strategic transactions can overcome these challenges, promoting long-term growth and prosperity for businesses in the region.

What role do local advisors play in facilitating transactions, and can you provide examples of your work?

Local advisors play a crucial role in facilitating transactions in Cyprus. Their expertise in market dynamics, regulatory frameworks, and deal structuring is essential throughout the M&A process. They provide strategic and valuation advice, assist in due diligence, navigate regulatory requirements, optimise transaction value, and support post-merger integration. Our local team at KPMG Cyprus assists business owners in maximising shareholder value and achieving their M&A objectives. For instance, we recently advised on a successful cross-border acquisition of a UK PLC acquiring a Cyprus-based company as well as an acquisition in the local energy market.

To explore the latest opportunities promoted by KPMG Cyprus, access our publication here featuring a selected list of unique business investment opportunities by KPMG's Deal Advisory.