CZECH REPUBLIC Law and Practice Contributed by: Petr Janů, Vladislav Klimeš and Leoš Vavřík, BADOKH
BADOKH 28. října 767/12 110 00 Prague 1 Czech Republic
Tel: +420 222 937 515 Fax: +420 222 937 515 Email: info@badokh.com Web: www.badokh.com
1. Trends 1.1 M&A Market
• the consolidation of the energy and defence sector; • a cautious shift towards more efficient energy solu - tions, including renewables and energy storage; • the increasing popularity of locked-box pric - ing mechanisms, a close-to-nil liability concept, warranty and indemnity insurance and earn-out structures; and • exits by domestic entrepreneurs from their compa - nies established in the 1990s and early 2000s. Major Czech groups are increasingly acquiring com - panies abroad, as the domestic market no longer offers enough new and attractive growth opportuni - ties for them. These trends are expected to continue in 2026. While financing remained available for Czech M&A transactions in 2025, the market continued to favour well-structured, bankable deals, with increased focus on pricing and execution certainty. Deals are not as competitive as before. However, the market is still generally on the seller-friendly side, despite the M&A market having cooled off a bit in the previous years. 1.3 Key Industries The Czech economy is highly dependent on the auto - motive industry and energy-intensive manufacturing. Industries that have recently seen significant M&A activity include energy, defence, manufacturing, real estate and retail sector. Software, pharma & health - care, automation, digitisation and robotisation, and telecommunications are becoming increasingly attrac - tive sectors.
Both the volume and overall value of transactions in 2025 exceeded those of the preceding year. The outlook for 2026 is moderately optimistic, but should remain subject to a cautious approach. Positive factors include the removal of the threshold for tax exemption on income from the sale of shares held by individuals in business corporations, low inflation, and the expected economic growth. However, the Czech M&A market continues to face structural challenges, including the ongoing war in Ukraine and Iran. Further - more, geopolitical volatility – particularly the impact of retaliatory tariffs adversely impacting the automotive sector and disruption of supply chains – may pose additional risks to the market outlook for 2026. Notable transactions include the acquisition of Zentiva (a leading manufacturer and developer of pharmaceu - ticals) by the GTCR, and the purchase of the Palla - dium shopping mall in Prague (a large shopping centre in a prime area of Prague) by the REICO/Erste Group. Czech investors were also active in both domestic foreign jurisdictions, with key transactions includ - ing the acquisition by Colt CZ Group of a 51% stake in Synthesia Nitrocellulose (a manufacturer of a key component used in the production of gunpowder) and EP Group’s takeover of International Distributions Ser - vices, the owner of Royal Mail (the United Kingdom’s national postal service provider). 1.2 Key Trends The top trends in the Czech M&A market in the last 12 months include:
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