2023 Trends and Developments in the Baltics

In Estonia, while the number of transactions had reduced in comparison to other (albeit record) years, the more notable decline was in fact the value of deals; there was a relatively healthy volume of M&A, but most of these deals seem to have been from the small-cap and mid-market segments. 

Despite the Russia/Ukraine conflict entering its second year, most market commentators still attribute this as a significant inhibiter to transactional activity, with inflation, high interest rates and market uncertainty interfering with the required financing. 

These developments affected numerous sectors, but sources frequently cited a specific detriment to the technology sector – a significant industry in the Baltic region and particularly Estonia.  

As in many other countries, the construction and real estate sectors were also hampered by these factors. However, one industry that seems to have shown more resilience is the energy sector, and particularly renewables, as the geopolitical situation continues to emphasise the need for energy security. 

Interestingly, M&A activity in Latvia did not appear to be as affected when compared to its Baltic neighbours. Nevertheless, most sources reported a slightly subdued market caused by the same factors. 

As seen in Estonia, the Latvian energy market is one sector that managed to maintain a level of activity. 

Parallels can be drawn between the Lithuanian and Estonian markets as well, with the value of transactions dropping more noticeably than the volume of deals, with sources suggesting that M&A levels were returning to a more typical level following the boom of 2021. A further similarity to the Estonian market is that the Lithuanian technology industry was identified as one of the main sectors affected. 

Another global trend that can also be seen in the Baltic region is the rise in contentious proceedings. In Estonia, the slowdown in the economy led to a reported increase in the number of disputes, particularly in the technology and real estate sectors, in addition to insolvency-related cases and employment issues as companies considered restructuring and redundancy processes. 

In Latvia, dispute resolution continued to be a busy practice area, with cases related to white-collar crime and board liability being particular topics highlighted by sources. 

And finally, Lithuania similarly reported a continuation and increase in cases involving management liability, sanctions and construction.