Why cross-border M&A is a huge opportunity within Europe, and how to approach it

M&A professionals have an enormous opportunity in terms of mid-market cross-border deals, particularly within Europe, but networking and working towards common goals are critical to take advantage of the potential. 

Jaro Betlej, Managing Partner of Betlej & Partners, a cross-border agency representing Polish sell-side companies, gives his view on this, why it exists, and how Dealsuite is playing a key role in helping him source deals. 

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‍Why cross-border mid-market is such a big opportunity in Europe today

There are two key reasons why cross-border M&A within the European mid-market is an attractive proposition right now. 

First, it is relatively untapped. While M&A departments at big banks have been working with the major consultancies in the top end of the market for many years, the mid-market and family-owned companies are still an open opportunity. And second, Europe is still fragmented, with different regulations, ways of doing business, and of course, languages. These natural barriers to cross-border M&A, which have meant that up till now, most activity has been domestic, or within sub-regions.

The upside of this situation means there are lots of opportunities to venture further afield. However, they need a different approach to the way banks and consultancies do their business. Mid-market business leaders tend to prefer a personal relationship with someone before they will consider taking on extra investment. In fact, often they have not even considered taking on investment opportunities from international companies until they start talking to someone who is an expert on the topic. 

“The people who run businesses in the mid-market are entrepreneurs, and they need to speak to other entrepreneurs, not someone in admin from a Chamber of Commerce, or an M&A manager at a bank,” says Jaro Betlej. “When entrepreneurs talk to entrepreneurs in adjacent areas with similar challenges, they can quickly find the potential for collaboration, and how they can solve problems together. This is a much more effective approach for the mid market.” 

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‍What this means for Poland specifically

Until a few years ago, many Polish businesses were operating and selling in eastern Europe. However, many of the former markets are no longer so easy to operate in, so they are looking to western Europe. 

Companies in western Europe can benefit from more competencies or greater resources or manpower in areas that are adjacent to their own core competencies, and the Polish side benefits from the same things, plus potentially access to new clients, ability to grow faster, and so on. Due to the market fragmentation and barriers mentioned above, it is sometimes difficult for these businesses to build connections in western countries, and that’s where making connections in the M&A field with an agency such as Betlej & Partners comes in. 

“We provide introductions to Polish companies that are interested in collaborating and taking on investment from western European organisations, which in turn receive high-quality services and products from Poland,” says Betlej. 

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‍The cross-border trend requires network building and common goals 

While there is enormous potential in cross-border M&A, there needs to be a focus on building human relationships in different markets. For example, Betlej recently visited Manchester in the United Kingdom for a networking event organised by Dealsuite. While people were surprised that someone came all the way from Poland for the event, it has been a first step to build relationships with a number of M&A agencies, and further discussions have already taken place about common business areas and how they can collaborate.

“Until my trip, Polish companies were not on their radar, but now they have told me that they will start to ask their clients in England if they are interested,” says Betlej. “In fact, Dealsuite has been instrumental in helping me build my network already, through these events, but also through the online tools that help me look at potential M&A opportunities in different markets and industries.”

Further, the focus always needs to be on finding synergies between companies, rather than focusing on money. “Most successful people have money. They don't need that,” says Betlej.  “For any kind of M&A activity, growth is the key thing, and that is driven by collaboration, where two companies can provide one another with competencies, resources, or clients that benefit each other.”

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