Evidence of Fire-Sale M&A in European Transition Countries

The aim of this paper is to determine differences in variables that createinvestment climate and therefore affect the values of incoming crossborderM&A in selected European transition countries. Cluster analysisfor 1999 and 2007 shows that countries with unfavourable investmentclimate received high levels of incoming cross-border M&A. Sole countryin the cluster characterised by healthy investment area (Slovenia)had the highest GDP per capita accompanied with the lowest values ofincoming cross-border M&A relative to its GDP. These results could beinterpreted as an evidence of fire-sale M&A in most European transitioncountries. In 2010, situation changed and although recession lefttrace, data on cross-border M&A indicate that foreign investors focusedmore on companies which operated in countries with healthier economy.These results indicate that a healthy investment climate is necessaryto provide a sustainable economic development of a country.