D. Constantinou: M&As are the only way out for businesses

Cyprus has entered a new era when it comes to mergers and acquisitions (M&A) and is now firmly on the “radar” of foreign investors, according to Partner at Oaklins, Dinos Constantinou.

Discussing the flurry of activity that has been observed in recent months, Constantinou told InBusinessNews that M&As are now the only option for businesses, regardless of their field of activity, if they want to survive and remain competitive in the current and multinational environment.

International trends and Cyprus

A recent EY study (CEO Outlook Pulse) showed that almost all CEOs worldwide are looking to enter strategic agreements over the next 12 months (98% compared with 89% in the January 2023 study), with 59% actively looking for M&As, 47% considering foreclosures and 63% intending to enter strategic alliances or consortia.

Cyprus is no exception. In fact, the Council of Ministers recently approved an action plan with incentives to promote M&As among small and medium sized enterprises, to help them survive and grow.

But why have M&As become a trend, particularly in Cyprus?

Constantinou said the mergers and acquisitions that have taken place recently in the country were both between Cypriot businesses as well as between Cypriot and foreign entities.

As he said, Cyprus now attracts investors from a number of countries, including Israel, Ukraine, USA, and of course EU countries, including Greece. This was not always the case.

Prior to its accession to the EU, Cyprus didn’t even allow foreign investments in the country, and so the conditions were not favourable for M&As.

“For years Cyprus was not an option for investors, for various reasons, including its bad reputation with money laundering, while prior to its accession to the EU foreign investments were not allowed,” said Constantinou.

As he explained, the idea of entering the EU started off as means to help solve the Cyprus problem. The failure to find a solution brought things to a standstill and then more problems followed with the haircut on deposits, bailout, “golden passports” and money laundering.

However, things have changed in recent years. A series of international events worked in Cyprus’ favour when it comes to M&As, with many countries starting to eye the country as a potential investment destination.

No other way for Cypriot businesses

In Cyprus, the companies that proceeded with M&As have become competitive abroad. Those left behind are now having to compete with these strong businesses. So there is no other way out for them but to do the same if they want to survive and compete, said Constantinou.

“At the same time, they are having to compete against the foreign companies that have chosen Cyprus to launch a start-up from scratch, investing a lot of capital,” he added.

And this is happening across all sectors. “All growing businesses and organisations are now considering Cyprus as well,” Constantinou said.

Asked to comment on the government’s incentives scheme for M&As, the Oaklins partner said this was a positive development and something that will help businesses gain a better understanding of the current situation.

OAKLINS specialises in corporate acquisitions and mergers, capital development, debt advisory services and corporate finance services. Its workforce includes more than 850 professionals, in more than 60 offices in the 45 countries where it operates. It recently opened an office in Cyprus, taking the local industry up a notch.