Exploring Poland: an increasingly attractive M&A destination

Poland has emerged as a compelling destination for M&A activity over recent years. Boasting a diverse economy, a wealth of untapped potential and a strong strategic position within Europe, the market has become increasingly attractive to foreign investors.

As Associate Manager at Excalibur, a boutique M&A advisory firm in Poland, Bartosz Kiejrys has witnessed this growth firsthand.

“The focus from day one was to build an international company,” he says. “We now have a global network of really close and trusted partners - at least 90% of the deals we work on are with foreign investors from all over the world.”

Founded a decade ago by partners Michał Portalewski and Paweł Pawłowski, Excalibur supports both buy and sell-side clients. The company completed 14 deals last year, making it the top-performing independent advisor in the CEE in terms of deal volume - and third overall after large corporate players PriceWaterhouseCoopers and Grant Thornton - according to financial analysis firm Mergermarket.

A growing, diverse economy

Since transitioning from a socialist to a free-market economy around 30 years ago, Poland has enjoyed consistently higher growth rates than many of its European – and global - counterparts (averaging 4% annual GDP growth over the past five years). This rapid economic expansion has created a fertile ground for entrepreneurship, and the emergence of a new generation of successful business owners, many of whom are now reaching retirement age.

Poland's diversified economy and robust infrastructure further bolster its appeal to investors. While many of its Western European counterparts concentrated their development efforts in specific sectors, Poland has grown more evenly across various industries. This diversity ensures continued economic stability and provides a broad spectrum of investment opportunities.

Limited history of succession

Poland does not share the long-standing tradition of multigenerational businesses that characterises many Western economies, such as Germany. This means there are a growing number of Polish companies seeking strategic partnerships or acquisitions, and therefore significant opportunities for investors to tap into the country's thriving market.

“Because our free-market economy is young we do not have an established succession culture and the legal framework is also only just catching up,” says Kiejrys. “So now we have a huge wave of young, family-run firms without succession plans. It's a standard client case for us.”

Strategic location

Recent geopolitical events, including the conflict in Ukraine and the COVID-19 pandemic, have underscored the importance of diversifying supply chains. Poland - with its strategic location, well-developed infrastructure, and skilled workforce - has emerged as an ideal destination for companies looking to relocate operations closer to home.

These ‘nearshoring’ and ‘friend-shoring’ trends have further boosted M&A activity in Poland, as foreign investors seek to capitalise on the country's favourable business environment and avoid partnerships with those that do not share similar business cultures and ethics.

“Before the war, Poland was the biggest M&A market in terms of number of transactions and transaction value within Central and Eastern Europe, not counting Russia,” explains Kiejrys. “But now most Western investors are avoiding investment in Russia, our market position is even stronger.”

Fragmented marketplace

Although Poland is now largely considered a developed economy, there is still plenty of room for consolidation in the market.

“Industries that are consolidated in the West are often still very dispersed in Poland,” says Kiejrys. “This means there are a lot of smaller companies to acquire to consolidate the market, often - another point of opportunity for foreign investors.”

A centre for innovation

Poland is increasingly recognised for its innovation, technological development, and startup ecosystem. Its young economy leapfrogged many of the legacy systems that other countries were slow to replace, while its central location in Europe makes it a convenient base for businesses to access clients, partners and employees in both EU and non-EU countries.

“We jumped straight into the newest tech, so we have good infrastructure and implementation of the latest technologies,” explains Kiejrys. “We’ve become a leading location for tech investment and entrepreneurial talent.”

Interest from Big Tech firms has cemented Poland’s role as a tech hub, with the likes of Google and Amazon growing operations in Polish cities over recent years.  

Maximising deal potential in Poland

The M&A team at Excalibur remains small and its industry parameters are relatively broad. Yet it competes with big corporate entities. What’s the secret of its success?

“We prioritise quality over quantity, both in terms of the service we deliver and the projects we work on,” says Kiejrys. “Clients trust us – there have often been times where we’ve closed projects where other advisors have failed.”

To be successful you must be willing to put in the extra effort, he adds, and to cover all possible bases. Harnessing the right technology is an important part of this, especially when you’re targeting foreign investors.

“Dealsuite adds another channel to market a project - it increases the probability of finding the right buyer and broadens the universe of investors you can reach, particularly international clients.”

While a lot of M&A professionals’ work is hands-on, Dealsuite can also be used more passively, he adds. “Once you upload the project, you know that this channel is working, it's visible. Plus, it's a platform for professionals so there is a very good chance that your project will be seen by a credible investor who wants to move forward.”