POLAND Trends and Developments Contributed by: Agnieszka Janicka, Krzysztof Hajdamowicz, Tomasz Szekalski and Karol Kulhawik, Clifford Chance LLP
to risk assessment in volatile market conditions and were less willing to grant large loans for individual assets. This caused a visible decline in valuations and generated gaps between the expectations of sellers and buyers, which frequently resulted in transactions being abandoned. Limited access to bank financing opened the market to private debt, namely, alternative forms of financ - ing offered by non-bank entities. Currently, despite lower inflation and falling interest rates, access to bank credit should be easier, but significant involve - ment of private debt funds in M&A transactions is still being observed. From a global perspective, there is also growing engagement from the insurance sector, which increasingly participates in financing mergers and acquisitions, offering alternative sources of capi - tal for investors. This may also to a limited extent (due to regulatory restrictions) take place in Poland.
In addition, the higher costs of financing affected returns from investments. Many investors – including private equity funds, which typically base their models on high leverage and variable rates – had to contend with significant and unexpected increases in ongo - ing portfolio financing costs. Decreased costs of debt may result in higher valuations and, consequently, decisions about an exit.
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