We will likely be wrong with some of our predictions but still hope this is helpful. Like in other European markets we see a significant decline in the M&A activity. Overall, we are not optimistic and anticipate a more substantial general recovery not earlier than in 2021.

In Bulgaria, a return to the 2018-2019 deal volumes is unlikely in 2021. Only certain industries may benefit from a swifter recovery and actually see an increase in the volume and value of deals. Our picks are the industries that have proved to be resilient to the negative effects of the COVID-19 pandemic: healthcare and life sciences, telecommunications, media and technology, fintech and financial services (where there has been investment in automation and digitalisation and effective implementation and customer adoption of digital channels). There are only a few potential targets since a number of deals have been recently closed in those sectors like United Group/BC Partners/Bulgarian Telecommunications Company, PPF/Telenor CEE mobile operators, PPF/CME CEE TV operators, and the series of bank consolidations such as OTP Bank/Société Générale CEE operations, KBC Bank/NBG/United Bulgarian Bank, Eurobank EFG/Piraeus Bank, etc.

Reversely, other industries have been affected severely and will be struggling to remain solvent and avoid bankruptcy – divestments of non-core assets and businesses that may not recover in mid – to long-term (due to lack of sufficient funding or lower demand, or change of customer/consumer preferences). They will be targets for cash-rich domestic and international competitors who may seize this opportunity to consolidate and gain market share (subject to antitrust and other regulatory clearance) and financial investors (sovereign funds, PEs, VCs) and global and regional conglomerates. We have not seen many such in Bulgaria in the last decade and we can safely assume that the interest of such investors will remain modest (in comparison with other regions of Europe like DACH, UK, France, Italy and Spain or other countries in the CEE region like Poland, Czechia and Romania). These industries include automotive, travel and transportation, tourism (including events and HoReCa), sport and entertainment, professional services (including our own legal services). Such transactions will be challenging due to time pressure – the timely completion and integration of the acquired businesses or assets will be critical for the preservation of their fast diminishing value and survival. The targets will be distressed and unprepared. Practical considerations will affect proper due diligence and valuation: in the context of a nation-wide state of emergency and lockdown, many key employees, directors and managers (and professional advisers) will not be available to assist the vendors with speedy and thorough document and data disclosures, public institutions and regulatory authorities will process applications and procedures with delays, etc.

In any event, investors with dry powder who have already prepared their analyses for potential acquisitions and/or have obtained sufficient knowledge and insights of particular targets and industries will have a chance to act fast and close the deals in their pipeline that have been waiting for the proper timing.