BULGARIA Trends and Developments Contributed by: Venelin Dimitrov and Iva Georgieva, Komarevski Dimitrov & Partners
• logistics and warehousing, where increased e-commerce activity and regional supply chain reorganisation are driving sustained demand for high-spec facilities. Deal Structures: Becoming More Sophisticated As the investor base matures and the profile of trans - actions changes, so too does the way Bulgarian M&A deals are structured and closed. The local practice increasingly reflects international standards, espe - cially in deals involving PE sponsors or cross-border parties. W&I insurance: from novelty to norm Warranty and indemnity (W&I) insurance is becom - ing a familiar tool in Bulgarian deals above a certain threshold (typically north of EUR25 million enterprise value). It is particularly popular in: • PE exits, where sellers want clean separation and minimal tail liability; • competitive processes, where W&I provides com - fort to buyers and avoids negotiation bottlenecks; and • founder sales, where individuals may not be able (or willing) to offer robust indemnities. International insurers are now paying more attention to Bulgarian transactions, and local legal advisers are increasingly gaining experience in managing under - writing processes and disclosures. Locked-box and completion accounts While completion accounts are still the prevailing completion mechanism, thanks to the increased PE involvement on the Bulgarian M&A market, the locked- box accounts mechanism is rapidly gaining traction as it is a quick and clean alternative. Earn-outs, escrows and deferred payments Valuation gaps – especially in sectors where future performance is hard to predict – are often bridged using earn-outs or contingent pricing mechanisms. These are now standard tools, particularly in deals involving: • IT companies with growth projections based on product launches;
• services firms where client retention or key person continuity is uncertain; and • founder-led businesses where transition periods are necessary. Escrow arrangements and holdbacks are also com - mon, usually in the range of 5–15% of the purchase price and held for 12–24 months post-closing. FDI screening: a new planning variable With Bulgaria’s new foreign direct investment (FDI) screening regime, investors are adjusting their time - lines and structuring approaches. While approvals are generally expected to be granted, the process may add 30–60 days to the timeline. Legal advisers recommend early engagement with authorities and inclusion of FDI-related conditions precedent in SPAs. This development is not deal-stopping, but it does mark a shift in how early-stage planning and regula - tory risk are handled in Bulgarian M&A. Regulatory Developments and ESG: Adapting to New Realities FDI screening in practice The entry into force of the last piece of legislation from the FDI screening regime in Bulgaria, in July 2025, marked the country’s alignment with broader EU standards. While the system is still new, several key parameters are already shaping investor behaviour. FDI screening is mandatory and suspensive, meaning that relevant transactions cannot close before obtain - ing clearance. It applies to non-EU investors acquir - ing direct or indirect ownership in Bulgarian entities active in sensitive sectors, as defined under Article 4 (1) of EU Regulation 2019/452 – including energy, telecommunications, defence, transport and critical technologies. Screening is triggered if any one of the following thresholds is met: • acquisition of at least 10% of the capital in a com - pany operating in a sensitive sector;
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