ROMANIA Law and Practice Contributed by: Ileana Glodeanu, Andreea Cărare, George Ghitu and Delia Dumitrescu, Wolf Theiss
The authors have observed abundant M&A activity in the private equity space throughout the entire first half of 2025, and increasing activity in the second half of the year. They are confident that 2025 will prove to be a very intense year for the Romanian legal business environment with respect to M&A, possibly challeng - ing the most prosperous years for M&A before the major economic downturn. 1.2 Market Activity and Impact of Macro- Economic Factors Based on the authors’ experience in the first half of 2025, and their market knowledge, they see the tech - nology, healthcare, energy and consumer goods sec - tors as being particularly attractive to private equity funds in the remainder of the year. Several structural strengths contributed to Romania’s private equity appeal in the past 12 months. Politically, the country has faced periods of fluctuation. The most recent presidential elections ended with the victory of a pro-European candidate, a result that restored the trust of investors in the economic potential of Roma - nia. The newly appointed government has recently enacted a set of regulations aiming to reduce the budget deficit from 9.3% of GDP in 2024 to 8.6% in 2025, through spending reductions and tax reforms. They have publicly declared their commitment to ensuring Romania remains as a trustworthy destina - tion for investors. The ongoing war in Ukraine, at the border of Romania, and broader geopolitical tensions continued to create uncertainty and volatility in the market, making inves - tors more cautious and selective in their investments. However, this also created new opportunities for Romania, which is a preferred destination for inves - tors looking at the CEE region. Ongoing infrastructure modernisation, particularly in transport and energy networks, is being supported by EU cohesion funds and national initiatives, and has contributed significantly to Romania’s attractiveness to investors. Romania has been experiencing high inflation and rising interest rates, with inflation exceeding 10% in 2024. The National Bank of Romania responded by
raising benchmark interest rates to over 8%, the high - est level in a decade. This macroeconomic environ - ment posed challenges for private equity investors. Higher interest rates increase the cost of debt financ - ing, making deals more expensive. Inflation eroded the purchasing power of consumers and could nega - tively impact company profitability. Recent tax meas - ures, especially the increase in VAT from 19% to 21%, and the increase in dividend tax from 10% to 16%, represent new challenges for investors. 2. Private Equity Developments 2.1 Impact of Legal Developments on Funds and Transactions In recent years, Romania has seen a series of legal and regulatory developments that have directly impacted private equity investors, both in terms of transaction execution and the ongoing management of portfolio companies. The most significant changes have occurred in the areas of foreign direct investment (FDI) screening, corporate governance, taxation and investment regulations for institutional investors. A defining shift in the Romanian legal landscape has been the comprehensive overhaul and expansion of the FDI screening framework. The scope of review now applies not only to non-EU- but also to EU- based investors acquiring control in strategic sectors. A relatively low threshold of EUR2 million has been introduced for sensitive sectors. Moreover, failure to obtain prior clearance can result in transactions being declared null and void. These changes have signifi - cantly affected deal timelines and transaction plan - ning, particularly in sectors such as energy, technol - ogy, defence, infrastructure and financial services. As a result, private equity sponsors are now required to factor in longer regulatory review periods, conduct enhanced pre-signing diligence, and in some cases, structure deals to defer control transfer until FDI clear - ance is obtained. Separately, recent amendments to Romanian com - pany law have somewhat simplified the governance of companies. Among other updates, legal recognition was granted to remote general meetings and electron - ic voting, improving operational efficiency – especially
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