In a recent Platforum9 session, Alexandru Birsan, founding partner of Filip & Company in Romania, provided comprehensive insights into the mergers and acquisitions landscape across Southeast Europe. With 25 years of experience in capital markets and M&A, Alexandru offered a practitioner’s perspective on how this region has transformed from closed economies to sophisticated investment destinations attracting global capital.

The Transformation Journey

The evolution of Southeast Europe’s M&A market represents one of the most dramatic economic transformations in modern history. Beginning with the fall of the Berlin Wall in 1989, the region experienced a widespread movement towards democracy and market economies.

“We’ve seen markets going from essentially closed to markets that are extremely hot markets, where some of the leading clients in the world are making investments and exits,” Alexandru explained. This transformation included major corporates, top private equity houses, and a phenomenal growth in sophisticated transactional legal services.

The pace of change varied significantly across countries. The Visegrád countries—Poland, Czech Republic, Slovakia, and Hungary—moved faster initially, whilst others faced different rhythms due to internal political factors or, in the case of former Yugoslavia, civil conflicts that created turbulence in international relationships and delayed investment flows.

The European Union Catalyst

The European accession process proved crucial in accelerating economic transformation across the region. “For all of us in Eastern Europe and southeastern Europe, turning our face towards the European Union was a defining factor in this process towards market economy and rule of law,” Alexandru noted.

The EU integration requirement forced countries to develop democratic, rule-of-law-based states, creating the foundation for economic flourishing. This resulted in a massive catch-up effect, with all countries significantly poorer than the EU average before joining but experiencing tremendous growth thereafter.

Romania exemplifies this success story, achieving the highest average growth rate in Europe between 2001 and the present. This growth culminated in remarkable achievements like UiPath’s €40 billion Nasdaq listing—something Alexandru noted would have been “in the realm of science fiction in 1989.”

Romania’s Success Formula

Romania’s particular success stems from several key factors. The country maintained consistent focus on European integration whilst developing strong pro-European sentiment among citizens. “We are the most EU-friendly country in the European Union,” Alexandru observed, with sustained popular support despite efforts from unfriendly parties to promote Euro-scepticism.

Additionally, Romania maintained strong pro-American sentiment, which Alexandru noted extends to surprisingly high approval ratings for political figures. This dual orientation provided stable international relationships crucial for investment confidence.

The country also underwent a significant anti-corruption drive between approximately ten and seven years ago, with American-trained prosecutors leading efforts that substantially cleaned up the business environment. This allowed entrepreneurs and investors to focus primarily on business rather than navigating corrupt practices.

Investment Patterns and Market Dynamics

The development followed logical economic patterns, with investors typically expanding first to Poland due to its size and early reforms, then to Romania, and subsequently to other markets based on economic size and potential. This created a natural progression that smaller markets could anticipate and prepare for.

“When companies decide to expand, they look at macroeconomics and size of the market, addressable potential,” Alexandru explained. Whilst smaller markets in the region receive investment attention, they face cost-benefit analyses that favour larger economies with greater scale potential.

The region now experiences significant inter-regional M&A activity, with targets often spanning 7, 11, or 15 countries simultaneously. This reflects the maturation of businesses that have established multi-country presence and the sophistication of acquisition strategies.

Reverse Investment and Local Capital Formation

An interesting development involves successful local entrepreneurs expanding beyond their home markets. These aren’t necessarily businesses that faced little competition initially, but rather companies that succeeded despite significant competition from international players.

“The most successful ones are people who have been very focused on their market, but had significant competition from abroad,” Alexandru noted. “Through focus and execution, they were able to build strong businesses and then take that business abroad with confidence.”

This reverse investment pattern reflects the cultural characteristics of Eastern European entrepreneurs who, according to Alexandru, are “culturally in many ways closer to the US model—less settled, more aggressive, more ‘want to take over the world’ type of people.”

Legal Market Evolution

The legal services market has undergone parallel transformation. Twenty-five years ago, finding qualified lawyers for privatisations meant locating mostly individual practitioners. Today, the region boasts large, sophisticated, transnational law firms alongside quality international firms.

Over 90% of M&A deals in Romania now use Romanian law as governing law, reflecting increased client confidence in local legal frameworks and practitioners. This shift also reflects economic considerations, with hourly fee ratios sometimes reaching 1:5 between Southeast Europe and London.

“As local capacity has increased in qualification and availability, and as rates have continued to go up in Western Europe, clients can sometimes make a judgment call,” Alexandru explained, questioning whether €1,000-per-hour partner advice is necessary for routine transactions.

Current Investment Sectors

The most active investment sectors across the region include:

Financial Services: Continued consolidation, particularly outside Romania, remains a significant opportunity.

Healthcare: Driven by demographic trends, this sector experiences substantial activity both in Romania and regionally.

Technology: Most countries maintain strong IT and technology capabilities, generating consistent deal flow.

Industrial: West European companies continue relocating operations to the region, creating acquisition opportunities.

Energy: Both traditional and renewable energy sectors remain active, including infrastructure development and distribution company transactions.

Real Estate: Described as robust across the region, reflecting local cultural preferences for property ownership.

Deal Size and Volume Growth

The market has experienced growth both in deal size and volume. Whilst large, attention-grabbing deals occur several times annually per country, the more significant development involves the dramatic increase in mid-market transactions.

“There are many, many more transactions in the €10 million to €100 million range—just incomparable to 20 years ago. We’re talking dozens of times more deals of this size,” Alexandru noted. These represent transactions where sophisticated legal counsel is routinely engaged.

Regulatory and Cultural Adaptation

The standardisation of legal frameworks has simplified international investment. Alexandru’s ideal scenario involves explaining local differences in just five minutes of a one-hour investor call, leaving 55 minutes for business discussion rather than regulatory navigation.

“If you can just say our laws are the same, we have rule of law, and everything gets pretty much predictable, then you have between 55 and 58 minutes to talk about the business,” she explained. This approach generates significantly more growth than countries requiring extensive regulatory explanation.

Future Outlook

Looking ahead, Alexandru anticipates continued growth across multiple dimensions, “geopolitics allowing.” The region should experience continued economic growth higher than Western Europe, leading to increased sophistication, higher deal volumes, and larger average deal sizes.

The foundation for this optimism rests on established rule of law, EU integration, stable legal frameworks, and a generation of entrepreneurs and professionals educated in market economy principles. These factors position Southeast Europe for sustained development as an attractive investment destination.

Strategic Implications

For international investors and advisors, Southeast Europe represents a mature emerging market opportunity combining EU regulatory frameworks with growth potential exceeding Western European levels. The region offers the advantage of familiar legal structures whilst providing access to dynamic economies with strong local talent and established international relationships.

The legal market’s evolution demonstrates how rapidly professional services can develop in supportive environments, offering lessons for other emerging markets whilst providing confidence in local capability for sophisticated transactions.