According to the Mid-market M&A in Russia report released by PricewaterhouseCoopers, mergermarket and Bowne, there will be a greater number of M&A deals in Russia over the next twelve months, but they will be on a smaller scale. And despite the recent market turmoil and downturn in M&A activity, the overall view among analysts is that the Russian mid-market will remain fairly resilient and will continue to see deals being made.

The report is based on the results of a roundtable discussion with leading senior executives in July 2008, as well as market statistics from mergermarket covering deals in the range of €30–300m for the first half 2008.

According to mergermarket data, the value of announced mid-market transactions exceeded €7.4 billion in the first six months of 2008, while the number of deals reached 61. By industry breakdown, the Energy, Mining and Utilities sector led the M&A mid-market, both in terms of value and volume. Second place in volume terms was the consumer sector, while third place was shared by the industrial sector in volume terms, and the financial services sector in value terms. Inbound M&A deals reached almost €2.8, representing 38% of all mid-market deals. The US was the most active buyer, with 29% of mid market deals in volume terms. Going the other way, US targets accounted for 24% of the volume of outbound mid market M&A deals by Russian buyers.

Among the key market trends highlighted in the survey, the following may from a mid-term perspective influence the mid-market:

• The need for capital will be a driver of M&A activity in the mid-market
• The majority of Russian mid-market companies can not afford to list, so the growth prospects reliant on foreign or strong liquidity partners
• Growth prospects and increasing transparency will be attractive to investors

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