The IT Services Industry in Romania
by NorthStar Corporate Finance
Romania’s IT industry is one of the fastest-growing ones in Central and Eastern Europe. With its well-diversified and rapidly expanding economy, the nation has become a fertile ground for mergers and acquisitions (M&A), and there is a growing momentum in both cross-border and domestic transactions.
The Romanian mergers and acquisitions (M&A) market recorded 241 transactions during 2023, with a total estimated value of $7.1bn. This indicates a 6.1% increase by estimated value on a year-on-year basis ($6.6bn in 2022) and a 6.2% reduction compared to the transaction count of 2022 (257).
On a global level, M&A activity during 2023 continued its downward trajectory, extending a previous decline observed in 2022 and marking a 10-year low in terms of value. This trend was attributed to a prolonged environment of sustained higher financing costs, rising geopolitical tensions, general economic slowdown and heightened regulatory constraints.
These headwinds led the value of global M&A to decrease by 13% year-on-year, while the value of European M&A decreased by 19%. In this context, Romanian M&A activity during 2023, much like in 2022, continued to defy both global and regional patterns, emerging once again as a notable outperformer.
Strategic investors maintained their predominant role in the local M&A market, accounting for 88.0% of transactions in 2023 by volume. Domestic deals experienced a marginal uptick, with 119 recorded transactions, compared to 116 in 2022, while the volume of transactions by foreign investors (inbound) declined by 13.9% year-on-year, totaling 105.
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Despite a lower overall weight in the total number of deals and a decrease to 11 deals from 14 in 2022, the number of outbound transactions remains strong from a historical perspective and reflects the resilience of Romanian investors’ willingness to execute cross-border transactions.
The most active sectors by deal volume were real estate, hospitality & construction (17.0% of the number of transactions) and consumer products & retail (15.4%), followed by technology (12.4%) and energy & utilities (12.0%). Technology, has secured the third position in terms of deal volume, emphasizing the growing importance of addressing digital transformation needs in a new economy, accelerated by the advent of emerging technologies such as artificial intelligence.
Microsoft România SRL, a subsidiary of Microsoft Corp, acquired Movial Corp for an undisclosed amount. The acquisition expands Microsoft România SRL's presence in Romania. Following the acquisition, 60 employees of Movial Corp would join in Microsoft Devices, and Movial Corp's office in Iasi would become Microsoft's fourth research and development center in the region. (2020)
ARoBS Transilvania Software SA acquired Nordlogic Software SRL for an undisclosed amount in cash. Under terms and condition, ARoBS Transilvania Software SA raised capital from BVB investors during the private placement for its shares in october 2021 and Bank financing for completing transaction. The transaction would expand ARoBS Transilvania Software SA's software services and strengthen its presence in Transylvania, western Romania, and North America. (2022)
Fortech SRL, a subsidiary of GlobalLogic Inc, ultimately owned by Hitachi Ltd, acquired Eminus Software SRL for an undisclosed amount. This transaction strengthens Fortech SRL’s position in the market and becomes a growth vector of core digital engineering talent within GlobalLogic Inc’s Central Eastern Europe region. (2023)
