AUSTRIA Trends and Developments Contributed by: Horst Ebhardt, Philipp Kapl, Hartwig Kienast and Matija Bernat, Kinstellar
tronic communications, media and technology (TMT), and consumer products & retail sectors in terms of deal count. However, the highest deal values were recorded in life sciences & chemicals (EUR8.9 billion) and financial services (EUR7.1 billion), fuelled primar - ily by large outbound transactions. Geopolitical and economic challenges shaping Austria’s PE/M&A market US tariffs, the ongoing war in Ukraine and other geo - political and economic factors continue to impact the Austrian PE/M&A market. Increased US tariffs may pressure Austrian exporters, prompting strategic M&A to establish US operations and mitigate trade barriers. The Ukraine conflict raises regional uncer - tainties, slowing cross-border transactions in Eastern Europe but encouraging companies to secure strate - gic assets in more stable markets like Austria. Rising energy costs and inflation challenge energy-intensive sectors, driving PE/M&A activity focused on acquiring efficiency-enhancing technologies or divesting non- core assets. Finally, higher financing costs – particu - larly affecting PE transactions – dampen deal activity, although potential interest rate cuts later in 2025 could revive momentum. Overall, these factors create both challenges and opportunities for strategic consolida - tion and investment in Austria. Distressed M&A and insolvency trends Austria’s corporate landscape continues to be shaped by a pronounced surge in insolvency proceedings, creating an active environment for distressed M&A. According to the latest data published by the Austri - an creditor’s protection association (“KSV1870”), the first half of 2025 saw 3,491 corporate insolvencies, marking a 6% year-on-year increase. On average, 19 companies per day entered insolvency, with the retail, construction and hospitality sectors being particularly affected, accounting for nearly half of all insolvency filings nationwide. A significant increase was also observed in the real estate sector, which recorded an 81% rise in insolven - cies compared to the previous year. This development was driven in part by further fallout from the insol - vency of the Signa Group, including Austria’s largest insolvency case of the year: Herkules Holding GmbH, with over EUR700 million in liabilities.
While insolvency numbers rose, aggregate liabilities fell by more than 60%, totalling EUR4.4 billion, due to the reduced number of large-scale insolvencies (defined as cases with liabilities exceeding EUR500 million). Vienna continues to be disproportionately affected, with nearly three-quarters of Austria’s larg - est insolvency filings registered in the capital, largely driven by distressed property developers. Looking ahead, KSV1870 expects up to 7,000 corpo - rate insolvencies by year-end (maintaining the elevat - ed levels seen in 2024 – ie, 6,587 registered insolven - cies), citing persistent financial stress among Austrian companies, geopolitical uncertainty and sustained pressure from energy and personnel costs. Only 43% of Austrian companies currently assess their busi - ness situation as satisfactory, and only 20% anticipate improvement over the coming months. Against this backdrop, distressed M&A is becom - ing an increasingly prominent feature of the Austrian transaction market. PE investors and opportunistic investors are showing greater interest in turnaround scenarios and special situations, particularly in real estate, retail and construction, where restructuring needs and asset repricing are opening up new invest - ment avenues. Austria expands real estate transfer tax scope – significant impact on PE share deals Austria’s revised real estate transfer tax (RETT) regime came into effect on 1 July 2025, introducing far-reach - ing changes that will significantly impact PE trans - actions involving real estate holding companies and companies owning significant real estate. The core reform lowers the ownership threshold for RETT-triggering share deals from 95% to 75%, and extends the observation period from five to seven years. In other words, RETT will be triggered once a shareholder – directly or indirectly – acquires (through a single or series of transactions) 75% or more of the shares in a company that owns real estate. This means that even staggered acquisitions or minor follow-on transactions (common in PE deal structures) can now trigger RETT liability. The rules apply not only to direct acquisitions, but also to indirect and intercompany
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