With the COVID-19 outbreak disrupting the M&A market in 2020, the start of the war in Ukraine in 2023 and the elections in 2024, Romania faced one challenge after the other. For a short period, this seemed to force investors to reassess their priorities and investment plans.

However, the M&A market remained buoyant, as indicated by the fact that the Romanian FDI Screening Commission finalised 50% more cases in 2024 compared to 2023; in 2024, a total of 471 foreign direct investment (FDI) screenings were completed, compared to 259 in 2023.

Notably, in recent years, there has been a noticeable shift from numerous smaller, local transactions towards larger, more strategic deals.

Romania has seen several high-profile deals that exemplify this trend:

• CVC Capital Partners, through Mehiläinen, acquired Regina Maria, the country’s top private healthcare provider, in a transaction valued at approximately USD1.4 billion for the Romanian leg;
• Urgent Cargus was acquired by Sameday for an undisclosed value, completing a trio of exits in Romania for Mid Europa, after the sale of Profi and Regina Maria;
• CVC also teamed up with Therme Group in a USD1.2 billion joint venture to scale up Therme’s wellness concept across Europe; and
• in a separate deal, a 70% stake in La Cocos, a local retail chain, was sold to Schwarz Gruppe for roughly USD117 million, following a 56% share purchase by CEECAT Capital, Morphosis Capital and EBRD in the previous year.

Private equity deals in Romania and the wider Central and Eastern European (CEE) region are also shifting noticeably towards larger, sector-driven transactions, with the most active sectors being healthcare, technology, real estate, hospitality and construction, energy and utilities. Also, sectors such as advanced manufacturing, logistics and business services are drawing more investment into Romania.

As regards deal structures, leveraged buyouts are the predominant structure. Minority investments are increasingly used for growth-stage companies in need of capital to scale operations, especially in tech and healthcare.

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 challenging the most prosperous years for M&A before the major economic downturn.

Based on the authors’ experience in the first half of 2025, and their market knowledge, they see the technology, healthcare, energy and consumer goods sectors 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 Romania. 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 destination 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 investors more cautious and selective in their investments. However, this also created new opportunities for Romania, which is a preferred destination for investors 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 highest level in a decade. This macroeconomic environment posed challenges for private equity investors. Higher interest rates increase the cost of debt financing, making deals more expensive. Inflation eroded the purchasing power of consumers and could negatively impact company profitability. Recent tax measures, especially the increase in VAT from 19% to 21%, and the increase in dividend tax from 10% to 16%, represent new challenges for investors.

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 significantly affected deal timelines and transaction planning, particularly in sectors such as energy, technology, 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 clearance is obtained.

Separately, recent amendments to Romanian company law have somewhat simplified the governance of companies. Among other updates, legal recognition was granted to remote general meetings and electronic voting, improving operational efficiency – especially in complex shareholding structures and in companies with foreign investors.

In April 2025, new regulations allowed Romanian Pillar III pension funds (voluntary private pension funds) to invest up to 10% of their portfolios in private equity funds domiciled in Romania, the EU or OECD jurisdictions. While the uptake remains in the early stages, this development may unlock a new pool of domestic capital for private equity funds operating in or targeting Romania. A broader impact is anticipated if similar rules are extended to Pillar II (mandatory) pension funds, which have significantly larger amounts of assets under management.

Last but not least, Romania’s accession to the Schengen Area has added to its attractiveness, particularly in logistics and infrastructure-driven assets. Taken together with the aforementioned legal reforms, Romania now offers an increasingly sophisticated investor-aligned legal environment for private equity activity.

On the other hand, Romania has implemented certain fiscal-budgetary measures that affect both deal structuring and ongoing operations of portfolio companies, such as:

• an increase in the tax rate related to dividends distribution from 8% to 10%, recently further increased to 16%;
• removal of tax exemptions for workers in IT, construction, agriculture and the food industry;
• reintroduction of the tax on special constructions, which was previously applicable in Romania between 2014 and 2016; and
• a reduction of the threshold for the application of the simplified micro-enterprise tax regime from EUR500,000 to EUR250,000 on 1 January 2025, to be further reduced to EUR100,000 from 1 January 2026.

In Romania, there are no specific regulators for M&A transactions or pertaining to private equity funds.

Nevertheless, in order to ensure well-balanced competition in the market, deals involving companies with turnovers exceeding certain thresholds are subject to clearance by the Romanian Competition Council. In principle, a transaction that requires the approval of the Romanian Competition Council cannot be implemented until clearance is obtained.

Turnover is assessed in relation to the financial year preceding the one when the transaction was carried out. The current cumulative thresholds for merger filings are as follows:

• a worldwide aggregated turnover of EUR10 million, or its equivalent in Romanian leu (RON), generated by the undertakings concerned; and
• a turnover of EUR4 million, or its equivalent in RON, generated in Romania by at least two of the undertakings concerned.

International deals that have effects in Romania must be notified if the foregoing turnover thresholds are met.

Distinct from the clearance of the Romanian Competition Council, Romanian legislation provides that the Romanian FDI Screening Commission must be notified if the transaction involves concentrations or change of control over companies or assets in certain strategic sectors that may pose a risk to national security, such as:

• citizens’ and communities’ security;
• border security;
• energy security;
• transport security;
• supply systems for the security of vital resources;
• critical infrastructure security;
• the security of information and communication systems;
• the security of financial, tax, banking and insurance activities;
• the production and distribution of weapons, ammunition, explosives and toxic substances;
• industrial security;
• protection against disasters;
• protection of agriculture and the environment; and
• safeguarding the privatisation of state-owned companies or their management teams.

Under the Romanian FDI Law, any investor – whether from the EU (including Romania) or from a non-EU country – must undergo the FDI screening process prior to making an investment in Romania, provided that the proposed investment meets the notification criteria established by the Romanian FDI Law. This also applies to new or greenfield investments in assets related to the start-up of a new undertaking, capacity expansion of an existing undertaking, diversification of an undertaking’s product portfolio or a fundamental change in the overall production process of an existing undertaking. A filing is required if the value of the investment is above the EUR2 million threshold. By way of exception, the FDI Screening Commission may review investments below EUR2 million if they pose potential risks to national security or public order.

Depending on the type of industries in which the targets are active, certain regulators and specific legal frameworks (prior notifications, obtaining consents, etc) may need to be considered. For example, certain procedures will have to be undertaken with the National Bank of Romania for transactions involving banks and financial institutions, the National Audio-visual Council of Romania for transactions involving radio and television, and the Financial Supervisory Authority (FSA) for transactions involving listed companies and entities operating in the insurance and private pensions sector, etc.

Non-EU nationals or entities may acquire real estate in Romania only in accordance with international treaties, based on reciprocity.

Private equity investors typically prioritise uncovering red-flag issues as part of due diligence investigations (legal, financial, tax, technical, environmental, IT, etc), rather than commissioning exhaustive, descriptive reports.

The scope and depth of the due diligence exercise is generally tailored to the structure of the transaction and the target’s industry. For larger or more complex targets, and for those in regulated sectors, the review will be more extensive.

The degree of focus on legal due diligence depends significantly on whether the transaction is structured as a share deal or an asset deal. Share deals are generally more common in Romania due to tax considerations.

For share deals, a legal due diligence process will typically investigate:

• title to shares;
• related parties’ agreements;
• employment matters;
• material contracts;
• financial arrangements;
• real estate;
• intellectual property rights;
• litigation; and
• compliance and data protection issues, which have been emphasised since the implementation of the General Data Protection Regulation (GDPR).

For asset deals, due diligence will focus mostly on aspects that are strictly related to the asset, such as:

• title over assets;
• employment and transfer of undertakings protection of employment (TUPE) in case of a business transfer;
• material contracts pertaining to the assets;
• litigation;
• financing related to the assets; and
• compliance and data protection.

Depending on the amount of information made available in typically structured virtual data rooms, or on the industry concerned (which may involve massive amounts of legal documentation, such as customer, lease or employee contracts), private equity investors frequently employ materiality thresholds or a sampling approach for streamlining the review process. For example, only contracts exceeding a certain value may be subject to detailed review.

Moreover, depending on the industry, due diligence exercises will also analyse specific regulatory issues, such as:

• regulatory compliance – ie, necessary authorisations and permits, and sector-specific compliance;
• change of control provisions, consents and notifications to be made prior to the transaction;
• intellectual property and IT issues, such as trade marks, patents, web domains, software licences, IT infrastructure, cybersecurity and data privacy policies; and
• ESG and sustainability matters, anti-bribery, anti-corruption and AML, which have become the norm for due diligence exercises in share deals.

A phased approach to legal due diligence is increasingly common. In the first phase, a more general review of areas that are relevant to the bidders’ initial valuation is conducted. Subsequently, a more in-depth legal review is conducted by selected preferred bidders, focusing on areas of concern or materiality identified in the first phase. This approach allows bidders to focus their resources on the most promising opportunities.

Historically, vendor due diligence was not a widespread practice in the Romanian M&A market. This was largely due to the prevalence of bilateral sale processes, where a single buyer and seller would negotiate directly; competitive auction processes initiated early in advance and having multiple bidders were relatively rare. In such a context, buyers typically conducted their own (buy-side) due diligence, and the need for a formal, seller-commissioned vendor due diligence report was limited.

However, the Romanian M&A landscape has evolved significantly in recent years. As the market has matured and the activity of private equity funds – both as buyers and as sellers – has increased, competitive auction processes have become more common. The shift has been particularly notable in transactions involving larger or more complex targets, or where the seller is a private equity fund seeking to maximise value and process efficiency. As a result, the use of vendor due diligence has grown and is now an increasingly recognised feature of Romanian M&A, especially in deals with a strong private equity component or international investor interest.

Vendor due diligence investigations aim to expedite the sale process by providing a comprehensive, independent overview of the target and reducing the time and resources required for multiple bidders to conduct their own initial investigations. Vendor due diligence investigations are also encouraged in order to prepare the targets for sale, and are used to anticipate and identify any possible legal issues that may give rise to price reductions, special indemnities and/or conditions precedent being requested by the buyer. In auction scenarios, vendor due diligence ensures all bidders have access to the same baseline information, supporting a level playing field and maintaining competitive tension throughout the process.

Traditionally, when vendor due diligence was used, the most common output was a legal fact book – a descriptive document summarising key legal facts. These fact books are less analytical and more focused on presenting the current state of affairs, rather than providing in-depth risk analysis or recommendations. With the increased sophistication of the market, more detailed vendor due diligence reports are now being prepared, especially in larger or cross-border transactions. These reports may cover legal, financial, tax, commercial, technical and cybersecurity aspects, and are often prepared by independent third-party advisers at the seller’s instruction. For certain transactions, particularly where time or cost constraints exist, a shorter “red flag” report may be produced, highlighting only material issues that could impact valuation or deal execution.

As the market matures and auction processes become more sophisticated, there has been a growing trend – particularly in larger private equity-driven or international deals – towards sell-side advisers offering a form of reliance to the successful bidder (and sometimes to shortlisted bidders). However, this remains less common in Romania than in more established Western European markets, and the terms of reliance are often heavily negotiated. Even where reliance is offered, it is standard for buyers (and their financiers, sponsors and advisers) to conduct their own confirmatory or “top-up” due diligence, focusing on areas of particular concern or addressing any gaps in the vendor due diligence report.

Small and mid-cap deals remain the norm in Romania; therefore, most acquisitions by private equity funds are carried out through private sale and purchase agreements. This deal format provides more flexibility with respect to tailoring the terms and conditions of the transaction. Tender offers via capital markets are substantially less frequent because the Romanian capital market is not that well established, and also because of the relatively limited number of listed companies suited to private equity investments. Meanwhile, court-approved schemes are essentially non-existent in Romania.

Auction sale processes are increasingly being used, particularly in transactions where the seller is a private equity fund or institutional investor seeking to maximise exit value. Sellers are free to determine the specific rules and procedures of the auction depending on the circumstances of the transaction, such as the transaction size, the number of bidders and the size of the stake in the target offered for sale. Competitive sale processes are usually co-ordinated for private equity funds by corporate finance or transaction advisory firms.

In Romania, as in most European jurisdictions, acquisitions by private equity funds are structured through new special-purpose vehicles (SPVs). These vehicles are used to ring-fence liabilities, facilitate financing and implement tax-efficient holding structures. Private equity funds or their add-ons commonly adopt a multi-tiered holding structure whereby a top company (TopCo) is, in most cases, incorporated in tax-friendly jurisdictions, but also in jurisdictions able to comply with financing requirements or that offer sophisticated protection for relevant liabilities, co-investments or exit possibilities (eg, Luxembourg or the Netherlands). Below the TopCo, a holding company (HoldCo) or middle company (MidCo) may be interposed depending on the financing needs or structural complexity, with the acquiring entity (new company or NewCo) typically established as a Romanian limited liability company (societate cu răspundere limitată; SRL).

Private equity transactions in Romania are typically financed using a combination of equity contributions from private equity sponsors and external debt, with the precise structure depending on the size of the deal, due diligence findings, risk profile and the standing of the relevant private equity fund on the market. Regional private equity funds typically pursue fully equity-financed deals, particularly in the small and mid-cap segment. In contrast, international private equity funds commonly structure deals with a mix of equity and debt financing, in the form of senior debt, mezzanine debt or institutional debt.

Commonly, small and mid-sized private equity deals are financed by senior and institutional debt, and large-cap transactions are financed by mezzanine debt.

Sellers typically seek comfort from private equity funds by requiring the fund, or another entity owned by the fund with financial means, to become the guarantor of an equity commitment letter, or to provide other guarantees. In the past year, amid more challenging financing conditions, there has been a notable shift towards stronger equity backing and the use of private credit providers, as traditional lenders have become more selective. This has been accompanied by increased seller scrutiny of financing arrangements during negotiations.

The variety and combinations of parties coming together in consortia is no longer limited to traditional club deals, strategic joint ventures or passive co-investment structures. Financial investors are increasingly flexible in assuming various roles within a deal structure, ranging from lead investor through to co-investor, underwriter or passive co-investor, depending on the nature of the transaction, their available resources and their sector expertise. Nevertheless, given the size of most deals in Romania, consortia are quite rare; most private equity transactions fall within the investment capacity of a single fund.

On the other hand, joint ventures between two private equity funds have become relatively common, especially when both funds have a similar strategy concerning the targeted industries (real estate, healthcare, pharmaceuticals, etc). Bringing two financial investors together with different return requirements and timelines increases the financial resources available and also offers an alternative exit option, with one of the partners possibly acting as a captive buyer should the other want to cash out. Aside from diversification and risk-spreading considerations, partnership arrangements allow financial sponsors to pool sector or geographic expertise and jointly leverage financing relationships to obtain more attractive terms.

The Romanian M&A market is generally dominated by completion accounts transactions, which is the preferred approach of corporate buyers. However, the majority of M&A deals with private equity funds involve a locked-box mechanism. This is mostly due to the fact that, when on the sell-side, private equity funds wish to secure a consideration that is certain, being reluctant to accept any post-completion liability or adjustments. In contrast, corporate sellers may be more willing to accept completion accounts or other forms of deferred or contingent consideration, depending on their strategic objectives and relationship with the target.

Even though it is not a general practice, the use of earn-outs and deferred consideration has increased in recent years, particularly in response to market uncertainty (such as that caused by the COVID-19 pandemic – and the numerous geopolitical tensions worldwide, which have had a lasting impact on the M&A market), including in sectors like technology, healthcare and energy.

Private equity sellers are generally reluctant to accept post-completion price adjustments or contingent liabilities, and will negotiate robust protection(s) in connection with locked-box consideration structures including:

• covenants prohibiting leakage between the locked-box date and closing (except for permitted leakage);
• covenants requiring the target to operate in the ordinary course of business during the interim period; and
• euro-for-euro compensation to the buyer or relevant target company for unauthorised leakage.

Private equity buyers usually rely on the locked-box pricing mechanism, with minimal or no debate. Furthermore, when on the buy side, private equity funds use the locked-box mechanism as an effective tool to compete against corporate buyers on the basis of lighter negotiation and speed of execution of the transaction documents.

Nevertheless, such transactions are heavily dependent on detailed legal, tax and financial due diligence, given the lack of any opportunity to adjust the price post-completion. In some cases, private equity buyers may accept completion accounts if the target’s business is volatile, or if there is uncertainty around the financial position at closing.

Roll-over structures – where sellers, often management or key shareholders, reinvest a portion of their sale proceeds into the buyer or the new holding structure – are an increasingly common feature of private equity in Romania. Roll-over equity typically represents 10–40% of the total consideration, with the remainder paid in cash.

There has been an increased trend towards the parties attempting to negotiate (but not necessarily to agree upon) interest being charged not only on the purchase price (the “ticker”), but also on locked-box leakage. The ticker interest is typically structured as a daily rate (or flat percentage) and may mirror either the cost of funds or a mutually agreed commercial rate. Many private equity buyers resist including a ticker, particularly where the deal timetable is short or where significant leakage protections are already built in.

It is common to have a dispute resolution mechanism in place for both locked-box and completion accounts consideration structures in private equity deals.

In the case of disagreement on completion accounts, the parties usually agree on expert determination proceedings and, depending on the general agreed terms of governing law and disputes under the transaction documents, further arbitration or local court proceedings will apply. Arbitration is preferred for its confidentiality and efficiency, while local court proceedings may be necessary depending on the specific circumstances of the dispute.

A similar mechanism is used with respect to locked-box consideration structures – ie, the parties agree on an expert determination, which is further supplemented by arbitration or local court proceedings.

There is a growing trend towards tailoring expert determination clauses carefully, especially in high-value or cross-border deals, with greater specificity around the scope of the expert’s authority, time limits for appointment and determination, as well as access to information and co-operation obligations.

Acquisition agreements in private equity deals are usually subject to various conditions, with the most common being:

• mandatory and suspensive regulatory conditions such as merger control clearance and FDI screening (which has grown in importance in Romania, and across the EU, since 2023–24, particularly in sectors such as energy, telecom, infrastructure, healthcare and data);
• financing (eg, bank consents);
• no material adverse change (which is not as common as in the USA but more frequent than in the rest of Europe); and
• most critical legal, financial and/or tax issues identified during the due diligence needing to be addressed/remedied prior to closing.

Conditions concerning third-party consents (such as key contractual counterparties) are typically encountered in transactions involving start-up businesses or SMEs, and in certain sectors where key contracts are fundamental to the value of the business, such as services and technology.

Shareholder approval is typically only a condition where required by law or the articles of association of the parties involved.

A growing trend in private equity transactions is the inclusion of sector-specific conditionality, which was not seen in previous years. Moreover, material adverse change clauses are currently being tailored more narrowly to reduce ambiguity around what qualifies as a material change.

The overall trend in the market is towards minimising conditionality to enhance deal certainty, particularly in competitive sale processes.

“Hell or high water” undertakings are rather uncommon in the local market, especially given that deals are not notably seller-friendly. Buyers mostly tend to agree on prompt filings, consulting with the seller (if needed) and keeping the seller informed about the approval process (if requested), but are reluctant to accept unconditional obligations to secure regulatory approvals, especially where significant remedies may be required. There is usually a distinction between merger control and foreign investment conditions, with the latter attracting even more caution as the process can be less predictable and the remedies required more far-reaching. The EU Foreign Subsidies Regulation (FSR) regime is increasingly relevant, but does not generally result in more onerous undertakings from buyers. The overall approach reflects a market that is balanced or buyer-friendly, with a focus on limiting the buyer’s exposure to regulatory risk. Where regulatory risk is material, it is more common to see tailored risk-sharing clauses, walk-away rights (if regulatory approval is not obtained by a longstop date) and/or limited remedy obligations, agreed on a case-by-case basis.

In private equity acquisitions, parties very rarely (if ever) agree on break fees in favour of the seller if the buyer breaches the acquisition agreement or is unable to consummate the transaction due to a lack of financing (“reverse break fees”). This usually happens only when the seller is in a strong position or agrees to offer an exclusivity period to a potential buyer when a competitive bid would have been an alternative.

There are no legal limitations on the value of break fees, but there may be contractual limitations – either capping the break fee at a certain percentage of the deal value or limitations related to situations created by action/inaction of the party in default of its obligations under the transaction documents (buyer’s inability to secure financing, failure to obtain necessary internal approvals, exceeding the exclusivity period, etc).

In other jurisdictions, break fees might range from 1% to 3% of the deal value, but in the local market this tends to be open and subject to negotiation, depending on the specific circumstances of the deal.

Commonly, acquisition agreements are designed to exclude all rights of the parties provided under the law to terminate the contract, to the fullest extent possible. Therefore, termination rights of the parties are generally limited to what is provided by mandatory law and what cannot be excluded by agreement (such as cases of fraud, wilful misconduct or gross negligence).

Termination circumstances that may be negotiated and agreed by the parties include:

• material breaches of warranties or covenants between signing and closing; the agreement will usually specify what constitutes a “material” breach and may require the breach to be incapable of remedy or not remedied within a specified cure period;
• failure to satisfy conditions precedent to closing (such as regulatory approvals, third-party consents or financing);
• non-compliance with the obligations of the buyer or the seller in connection with actions at closing; and/or
• an event causing a material adverse change; the definition of a material adverse change and the threshold for triggering termination are usually heavily negotiated.

Termination rights are generally closely linked to the longstop date, as a key temporal trigger for walking away from the deal. The length of the longstop period will depend on the anticipated time required to satisfy the conditions precedent, particularly regulatory approvals, or third-party consents. In practice, the longstop date in private equity transactions is often set between three and six months from signing, but it can be longer for deals requiring complex regulatory clearances.

With increasing regulatory layers, longstop dates are often being extended or made automatically renewable for specific regulatory clearance scenarios. Buyers in competitive processes are facing greater pressure to limit walk-away rights and accept tighter definitions of breach or material adverse change events.

In locked-box consideration structures, which are the most common structures in private equity transactions, the typical allocation of risk between the locked-box date and the closing date is the agreement on protection by way of the ordinary course of business provisions, with no leakage warranties and covenants.

Typically, the parties agree on warranties considering the information disclosed to the buyer, which limits the scope of the warranties to a certain extent. Private equity buyers also often push to obtain a disclosure letter from the seller.

To the extent that a buyer identifies a risk in the course of the due diligence, parties negotiate either an adjustment of the purchase price or an indemnity protection. Generally, indemnities are not subject to limitations other than (sometimes) with respect to the amount and time limitations, but in any case they are not qualified by disclosures. The liability of the seller with respect to fundamental warranties, such as claims for a breach of title, is usually capped at an amount as high as the purchase price.

In recent years, and unlike transactions involving corporate buyers, warranty and indemnity insurance solutions have often applied where the liability of the private equity seller/corporate seller is mainly limited to breaches of title warranties, excluding authority and leakage warranties.

Private equity sellers are typically more focused on achieving a “clean exit”, with minimal ongoing liability. In contrast, individuals or corporate sellers may be more willing to accept broader and longer-lasting liability, particularly if they retain an ongoing relationship with the target business or the buyer.

Across both private equity and corporate deals, risk allocation is further defined through:

• time limitations for bringing claims;
• financial limits (eg, caps, baskets, de minimis claim exclusions);
• limitation to direct loss (as opposed to indirect and consequential loss); and
• mitigation obligations.

Please see 6.8 Allocation of Risk with respect to warranties and indemnities in private equity deals. Generally, private equity sellers wish to limit their business warranties and indemnities in order to be able to promptly distribute the proceeds of the sale to their investors, without any contingent liability. As such, the package of warranties and indemnities offered by a private equity seller is more limited than that offered by a corporate seller.

However, structures where warranty and indemnity insurance bridges the gap between the offered warranty/indemnity package and the requested protection needs of buyers, where private equity sellers accept a warranty/indemnity package to a certain extent (eg, a small portion of the purchase price is kept as an escrow holdback) or where the management team provides warranties to the buyer in case they are required (and agree) to remain with the targeted business as co-investors alongside the buyer (in which case their warranties would usually match what is agreed by the private equity seller to the buyer) have been seen of late.

Full data room disclosure against the warranties is widely recognised in Romania and is generally featured in transactions where the seller is in a strong negotiation position. Private equity buyers’ preference is usually to not allow full disclosure of the entire data room (especially if it is not well structured and includes fragmented information), but rather to confine the seller to specific disclosures by way of preparing a disclosure letter against specific warranties.

In terms of customary limits on liability, for fundamental warranties the cap is often set at the purchase price or a significant proportion thereof. For business warranties, the cap is usually much lower, sometimes being as little as 1% to 10% of the purchase price, or even a nominal amount if warranty and indemnity insurance is in place. Similarly, claims for breach of fundamental warranties may be brought for a longer period (eg, up to seven or ten years), while claims for business warranties are typically limited to 12–24 months post-completion. Tax indemnity claims are generally negotiated for up to six years, reflecting statutory limitation periods. Liabilities for known issues are usually excluded from warranty coverage and may be dealt with via specific indemnities or price adjustments.

Please see 6.9 Warranty and Indemnity Protection. Other protections that are included in the acquisition documentation include tax, regulatory, litigation or other specific indemnities, and holdback and escrow arrangements to secure claims under the agreement.

In recent years, warranty and indemnity insurance (covering damages resulting from breaches of warranties and indemnities) has become a regular part of local M&A transactions, particularly in private equity deals. Known risks or statements where the due diligence exercise has been weak (lack of information, documents, limited scope of work, etc) are usually excluded from the insurance package. Such warranty and indemnity insurance may be useful to cover the gap between the seller’s interest in limiting its exposure and achieving a clean exit and the protection and recourse requirements of the buyer.

Litigation in connection with private equity transactions is not particularly common in the local market. Nonetheless, private equity-backed parties often select arbitration for resolving their transaction disputes, so the resulting contentious proceedings remain hidden from the eyes of the market.

Notably, various claims are being raised against sellers under the transaction documents in more and more cases. Such claims mostly relate to consideration mechanics, breaches of warranties, indemnifications and leakage amounts. The parties usually reach a settlement before moving a step further into litigation. This approach is particularly favoured in the private equity context, where maintaining relationships and achieving a clean exit are important considerations.

Public-to-private transactions – meaning acquisitions of listed companies followed by delisting from the Bucharest Stock Exchange – are very rare in Romania and do not form part of a developed transactional practice. While such transactions are permitted by law, they remain uncommon and are very rarely pursued by either private equity sponsors or strategic investors. This is largely due to a combination of factors that make Romania an unfavourable environment for public-to-private deals, particularly those involving financial sponsors.

• Structural considerations: The Romanian listed company landscape is characterised by highly concentrated ownership, where founders, state-owned entities or strategic anchor shareholders often hold between 50% and 90% of the share capital. The free float is typically minimal, and retail investors or inactive investment vehicles often hold the remainder. This structure leaves little room – or rationale – for private equity or other bidders to acquire control through market offers, and often results in minimal trading activity.
• Market dynamics: The Romanian capital market is still relatively shallow. The Bucharest Stock Exchange (main market) hosts fewer than 100 issuers, and the AeRO market – which is a multilateral trading facility for SMEs – has an even more fragmented and illiquid profile. There is no active culture of hostile or unsolicited takeovers, and pricing inefficiencies are rare. As such, there is limited arbitrage potential for financial sponsors, and few incentives to engage in delisting strategies that would require additional effort without a corresponding value upside.
• Legal and procedural burdens: Although Romanian law provides for mechanisms such as mandatory takeover offers, voluntary offers and squeeze-out procedures, the process remains highly formalistic and time-consuming. Regulatory approvals, valuation reports, and strict procedural steps are required to effect a delisting, which increases transaction costs and uncertainty. In addition, the board of the target company has only a limited procedural role, being required to issue a formal opinion on the offer but not having the authority to negotiate terms or structure. There is no fiduciary duty regime comparable to that in common law jurisdictions.

Against this backdrop, “relationship agreements” or “transaction agreements” between the bidder and the target (such as co-operation agreements, governance undertakings or negotiated merger frameworks) are not customary in Romanian public M&A practice. Generally, bidders proceed unilaterally through statutory mechanisms, with limited scope for pre-deal arrangements between the seller, the management and the acquirer.

There have been a handful of public-to-private transactions in the past two decades (eg, Terapia by Advent International in 2003–04, Albalact by Lactalis in 2016–17, Azomureș by Ameropa in 2012 and Zentiva by Advent International in 2017–21), but these remain exceptional and non-replicable cases driven by specific industry dynamics or unique shareholder circumstances.

In light of the foregoing, although Romanian law enables public-to-private transactions, the market structure, investor composition and regulatory burdens discourage such strategies in practice. Acquirers who obtain control of a listed Romanian company typically choose to consolidate ownership post-acquisition and subsequently request delisting, rather than pursue delisting as an integrated part of a public M&A strategy.

Any person acquiring or disposing of the shares of an issuer whose securities are admitted to trading on a regulated market (such as the BVB) is required to notify the issuer and the FSA of the voting rights percentage it holds following such acquisition or disposal whenever it reaches, exceeds or falls below one of the following thresholds: 5%, 10%, 15%, 20%, 25%, 33%, 50% or 75%. A similar reporting obligation is in place whenever the following applies.

• When a person holds – directly or indirectly – financial instruments that at maturity create an unconditional right to acquire, or the possibility to exercise the right to acquire, shares having incorporated voting rights of a listed issuer, or financial instruments that have a similar economic effect, irrespective of whether they grant the right to a physical settlement. Voting rights related to financial instruments that have already been notified, as mentioned earlier, will again be subject to notification if the person acquired shares having attached voting rights, and where such acquisition results in a total number of voting rights of the same issuer reaching or exceeding the previously indicated thresholds.
• When the number of voting rights, held directly or indirectly, aggregated with the number of voting rights attached to the financial instruments, again held directly or indirectly, exceeds or falls below the previously mentioned thresholds.
• When a person holds only financial instruments (with or without settlement rights) that are linked to voting shares of a listed issuer and which confer a long position, having an economic effect similar to holding shares. Only long positions are considered when calculating voting rights for disclosure purposes, and these cannot be offset by short positions.

The issuer of shares listed on a regulated market acquiring or disposing of, directly or indirectly, its own shares will publicly announce the percentage of own shares held as soon as possible, but not later than four business days after such acquisition or disposal, if the percentage reaches, exceeds or falls under the threshold of 5% or 10% of the total voting rights.

These disclosure obligations are particularly relevant for private equity-backed bidders contemplating a tender offer in Romania. Any stake-building activity prior to launching an offer – whether through direct acquisitions or through financial instruments – may trigger mandatory notifications and thus reveal the bidder’s identity or strategic intent before the offer is formally announced. The requirement to aggregate voting rights from both shares and economically equivalent financial instruments means that synthetic or indirect exposure (eg, through swaps, options or other cash-settled derivatives) cannot be used to avoid disclosure. In addition, if the 33% threshold is reached or exceeded, the bidder will be required to initiate a mandatory takeover offer unless a statutory exemption applies. As a result, private equity investors must factor these obligations into their structuring and execution strategy, particularly in the context of public-to-private transactions or acquisition strategies involving gradual stake accumulation.

Any person who, following their own acquisitions or those of the persons with whom it acts in concert, holds – directly or indirectly – securities that exceed 33% of the voting rights when added to their previous holdings or those of the person with whom it acts in concert is compelled to conduct a mandatory takeover of all the target’s shares within two months of such acquisition.

Until proceeding with the mandatory takeover, all voting rights exceeding 33% of the total voting rights will be suspended, and no additional acquisitions can be made in the target company.

The mandatory takeover is not required for exempted transactions, such as the following acquisitions:

• carried out as part of a privatisation process;
• from the Ministry of Public Finance or any other authorised entities within the foreclosure of budgetary receivables;
• between the parent company and its subsidiaries, or between subsidiaries of the same parent company; or
• under a voluntary takeover offer addressed to all shareholders for all their shareholdings.

Moreover, an additional rule applies if the 33% threshold is exceeded by “unintentional operations” that result from:

• a share capital reduction through the buy-back by the company of its own shares, followed by their cancellation;
• exercising a preference right, subscription or conversion of rights originally granted, as well as the conversion of preference shares into ordinary shares; or
• a merger/spin-off or inheritance.

In the case of such unintentional transactions, shareholders may choose between conducting a mandatory takeover and selling the shares in excess of the 33% threshold.

Romanian takeover regulations set forth that a bidder’s holdings must be aggregated with those of any persons “acting in concert”, significantly affecting private equity-backed bidders. The law defines persons acting in concert as those who co-operate – through express or silent agreement – in order to adopt a common policy regarding an issuer. This includes funds or entities under the same control, such as affiliated/co-investment vehicles, subsidiaries or portfolio companies, whose holdings may be attributed to the lead bidder.

This broad concept of concerted action means that even where individual acquisitions are made by separate legal entities, they may be treated as a single acquiring person for the purpose of calculating whether the 33% threshold has been crossed. As a result, private equity bidders must carry out careful mapping of direct and indirect exposure, at the fund level and across any co-investment platforms or SPVs used in the acquisition structure.

Furthermore, private equity funds must also take into account any synthetic or derivative instruments held by affiliated vehicles that could be deemed equivalent to voting rights, and may thus trigger attribution or aggregation under takeover rules. Failure to properly identify consolidated holdings could result in inadvertent triggering of the mandatory offer obligation and the suspension of voting rights, with potential regulatory and transactional consequences.

By far the most common consideration for takeovers is cash, even though Romanian law allows the bidder to establish the price in cash or securities, or a combination of the two. Generally, no minimum pricing regulations or cash requirements are to be observed; however, certain specific pricing rules are applicable to mandatory and voluntary takeover offers.

Romanian law does not explicitly prohibit the use of conditions in a voluntary takeover offer, nor does it provide a closed list of permitted conditions. While the law is silent on conditionality in express terms, market practice suggests that conditions such as regulatory clearances or minimum acceptance thresholds may be accepted, provided they do not breach the principle of equal treatment of shareholders. However, there is no express legal framework or published FSA policy that formally regulates or endorses the inclusion of offer conditions.

A bidder may choose to amend the initial offer terms (price, closing date, etc) provided that the FSA approves such amendment, the amendment would not entail less advantageous terms than the initial ones and the amendment is publicly announced, similarly to the initial offer.

In the context of Romanian public takeovers, offer financing must be fully committed and unconditional at the time the bid is launched. While the law does not expressly prohibit conditions related to financing, the structure of the regulatory regime – including the requirements for offer documentation and market conduct – effectively means that bidders must demonstrate funding certainty upfront. The bidder is expected to disclose the source, amount and terms of the funds used, along with the settlement mechanics proposed for the acquisition. As a result, public offers in Romania cannot be made subject to financing or the later satisfaction of drawdown conditions. This framework ensures transactional transparency and reinforces the principle that public shareholders should not bear the execution risk of the bidder’s financing arrangements. For private equity-backed bidders, this translates into a need for firm equity commitments and executed financing packages at the time the offer is cleared for launch.

Under Romanian law, deal protection measures such as break fees, match rights, exclusivity clauses and force-the-vote provisions are not expressly prohibited, but they are generally incompatible with standard public takeover bids addressed to a dispersed shareholder base.

However, in privately negotiated scenarios involving anchor shareholders or block trades – sometimes referred to as “deal-based offers” or private market transactions – certain limited protections may be agreed between the bidder and a selling shareholder. For example, cost reimbursement or exclusivity arrangements may be included as part of a bilateral commitment. These are essentially workable only in tailored one-to-one contexts, and do not translate to widely held targets or standard tender offers.

Romanian takeover law does not recognise force-the-vote provisions, as the target board has no power to approve or reject the offer. Likewise, support commitments cannot be made by the board on behalf of the company or its shareholders, although shareholders themselves may enter into pre-offer arrangements (eg, undertakings to tender or sell), particularly in negotiated transactions or block trades.

Governance Rights Below 100% Ownership

If a private equity bidder does not seek or obtain 100% ownership of a target, the governance rights with respect to the target outside of the bidder’s shareholdings very much depend on the rights granted to such bidder by law and under the target’s existing articles of association.

The shareholder should carefully review the articles of association of the company, as special corporate governance rules may be in place. If that is not the case, the law will apply – particularly regarding basic minority shareholders’ rights such as information rights, the right to call a shareholders’ meeting, voting requirements in connection with corporate and capital restructurings, and the entitlement to dividends.

Debt Push-Down Considerations

Romanian law does not offer a statutory mechanism for a debt push-down following a successful acquisition. However, a debt push-down may be achieved through post-acquisition restructurings, typically involving:

• a merger between the acquisition vehicle and the target; or
• intra-group financing.

Such post-acquisition measures generally require corporate approvals at the target level. In this case, minority protections under Romanian company law remain relevant, especially for significant structural actions (eg, mergers, asset transfers), and may constrain execution or increase litigation exposure.

An important legal constraint relates to financial assistance rules. Romanian law prohibits a company from granting loans, guarantees, advances or security to facilitate the acquisition of its own shares. These restrictions apply regardless of the bidder’s level of control and cover both direct and indirect forms of assistance, such as upstream loans or intra-group guarantees used to refinance acquisition debt.

If the target remains listed following the takeover, additional regulatory considerations arise. Any material post-acquisition transaction may trigger:

• disclosure obligations under capital markets rules;
• market abuse risk, particularly where the transaction affects the share price or could mislead investors; or
• merger constraints, since combining a listed target with a non-listed acquisition vehicle involves complex procedures requiring delisting, prior FSA approval and enhanced transparency regarding valuation, shareholder treatment and corporate continuity.

There is no statutory shareholding threshold that automatically entitles the bidder to push acquisition debt into the target. Instead, the feasibility of such structuring depends on the level of post-offer control, the resilience of minority shareholder protections and the bidder’s ability to navigate the interplay between corporate governance, capital markets regulation and financial assistance rules in practice.

Squeeze-Out Mechanism

Following a takeover offer, if the bidder obtained less than 100% of the voting rights, Romanian law allows the bidder to undertake a squeeze-out procedure.

The bidder is entitled to require those shareholders who have not subscribed to the offer to sell all their shares at an equitable price if one of the following conditions is met:

• the bidder holds at least 95% of the total number of shares that provide voting rights and at least 95% of the voting rights that can effectively be exercised; or
• the bidder has acquired, within the takeover offer addressed to all shareholders for all their holdings, shares representing 90% of the total number of shares that provide voting rights and at least 90% of the voting rights targeted in the offer.

The conditions, price and procedure for the exercise of these rights are strictly regulated. The squeeze-out right must be exercised within a maximum of three months of the finalisation of the takeover offer. The end result of the squeeze-out exercise is the de-listing of the target company.

Obtaining irrevocable commitments to tender or to vote by the target company’s main shareholders is very rare in Romania. Agreements to vote upon the instructions of the target or its legal representatives are null and void under Romanian law.

Equity incentivisation of the management team is a common feature of private equity transactions in Romania, particularly in mid-to-large-cap deals and in sectors where management continuity and performance are key drivers of value creation.

In most cases, when a private equity buyer acquires a company, a central objective is to ensure that the existing management team, with all its knowledge and experience, remains in place to support the company’s continued growth. This can make the difference between a great investment and one with only a small return. Hence, it has become critically important to create incentive compensation plans that align the management with the new owners by giving them a meaningful stake in the company.

Private equity investors generally look to give management incentives in order to minimise transition risk – by ensuring the company runs smoothly after the change of ownership – to retain critical knowledge and relationships of key executives, and to ensure that the management team is aligned with the new owner’s goals and long-term objectives.

In roughly one-third of private equity deals, up to 5% of the equity is set aside as incentives for managers. The practice, however, is not to grant all 5% in the first year, but rather to grant amounts over a few years in order to maximise retention.

Most commonly, a private equity fund allows the management to invest in preference shares without any voting rights. However, ordinary shares are also used, especially if the investment is made in companies that do not issue preference shares (such as limited liability companies). Management shares are often subject to vesting schedules, typically over a period of up to five years, though in some cases the vesting may extend even longer depending on the business plan or investment horizon.

Non-equity incentive schemes are less common but are seen in smaller deals or in programmes with many participants in which the equity structure is too burdensome. These schemes may take various forms, ranging from performance-based cash bonuses to cash-settled phantom equity or option plans.

Long-term incentive plans (“stock option plans”), based on which the investor grants equity in the company to the relevant management under certain conditions, are among the most preferred instruments in Romania. These plans are particularly attractive due to the favourable tax treatment applicable under Romanian law, given that taxation arises only when the shares are sold and a capital gain is realised rather than at the time the options or underlying benefit are granted; this is unlike other types of benefits, which are typically taxed upon receipt.

Good/bad leaver provisions are common provisions in the shareholders’ agreement or the articles of association of the target company.

A standard “good-leaver” clause would include the following circumstances:

• termination of the employment of the manager other than for a material breach of his/her mandate/employment agreement;
• resignation by the manager for specific reasons, such as a material reduction in their compensation or responsibilities;
• a material breach by the company of the terms of the management agreement;
• death or incapacity;
• retirement of the owner-manager at an agreed age; or
• if the manager is otherwise determined by the private equity fund to be a “good leaver”.

The standard definition of a “bad leaver” would apply in circumstances such as:

• termination of his/her position within the management structure for a material breach of his/her agreement;
• resignation of the manager shareholder for reasons other than those specifically agreed with the private equity fund; and
• the manager shareholder breaching specific restrictive covenants included in the shareholders’ agreement.

The leaver provisions for the management shareholders will vary depending on how the transaction is negotiated and structured.

Good-leaver provisions usually allow the management members concerned to retain their favourable pricing (and even vesting) terms. Bad-leaver provisions represent a substantial deterioration relative to the favourable good-leaver terms.

Regarding the vesting provisions, it is becoming more common in the market for private equity funds to reward top managers with performance stock options, rather than time-vested ones. This means managers are rewarded only if they reach certain indicators, such as specified revenue growth. Furthermore, it is a market standard to impose certain restrictions in the articles of association of the target companies in relation to the disposal of equity by the management shareholder (eg, obtaining board approval from the shareholders before selling their shares).

Post-termination restrictive covenants are fairly common in Romanian transactions for top managers and other key personnel. The most frequently used covenants include non-compete, confidentiality, non-disparagement and non-solicitation clauses.

Romanian law provides a limit on enforceability only for non-compete clauses mentioned in the employment agreement of management shareholders, with such clauses being valid only for a period of up to two years following the termination of an employment agreement. If the non-compete clause is provided in the transactional documentation or the management agreement of a manager shareholder, there is no time limitation under the law. Although Romanian law does not explicitly limit the duration of such covenants outside the employment context, in practice, the parties typically agree for these covenants to be applicable only for a period of two to five years, on a case-by-case basis.

In most private equity transactions, manager shareholders typically seek to secure a range of minority protections rights in the transactional documentation. These rights often include the tag right, the preference right and good-leaver provisions. Among these, the most frequently used protective measures are the tag right and the good-leaver clause; depending on the bargaining power of the parties, anti-dilution protection may also be negotiated and inserted.

Depending on the sector and the private equity fund’s degree of involvement in the activity of the acquired business, it is possible for the manager shareholder to hold some veto rights in relation to certain matters that are directly linked to the business. However, it is generally not customary for the management shareholder to have influence over the exit strategy of the private equity fund, especially when the private equity fund is the majority shareholder.

The level of control exercised by a private equity fund over its portfolio very much depends on the size of its investment in the target company and the overall strategy of the private fund in the industry in which the target company operates.

In most cases, private equity funds intend to use all leverage possible in order to make sure that their investment is well protected and under their control as far as possible. In this respect, private equity funds ensure that the transactional documentation includes the following.

• Investment and shareholders’ agreements, through which the investors appoint all or some of the members of the board of directors or the relevant statutory body in order for the ordinary business decisions to be in line with their fund strategy.
• The obligation for the board of directors of the target company to make information regarding the financial status of the company available on a monthly or quarterly basis, cash flow statements including management accounts, and operational and investment budget forecasts.
• The right to inspect book and records, typically upon reasonable notice.
• Prompt notification of material events or breaches such as covenant defaults, regulatory investigations, material litigation etc.
• For the purposes of establishing a stable shareholding and investment structure within the target company, assurance that there is a lock-up period in which no shareholder is allowed to proceed with an exit/transfer of participations.
• Certain reserve matters in respect of which any decisions will be passed only with the affirmative vote of the representatives of the private equity fund. Such matters in principle refer to:
1. amendments to the share capital or the issuance/transfer of shares;
2. mergers or spin-offs involving the target company;
3. the sale of a business or division of the target company or its subsidiaries;
4. mortgaging, pledging or permission to create a security interest over the target company’s shares;
5. approval of investments and of the business plan; and
6. any amendment to or change in the rights, preferences, privileges or powers of – or restrictions provided for the benefit of – the company’s shareholders.

In most transactions, private equity funds seek to implement corporate governance frameworks that enable them to protect their investment and oversee the general operations of their portfolio companies, without necessarily imposing the compliance policies applicable internally within the fund.

However, although less common, there are situations where equity funds invest in small or medium-sized companies that may lack the resources or internal capacity to manage complex business functions. In such cases, private equity funds may agree to apply their own compliance policies to ensure legal compliance and ultimately support the growth and stability of the investment.

Under Romanian law, private equity funds and their managers are generally not held liable for the actions or obligations of their portfolio companies, provided they act in a typical shareholder capacity and do not interfere in the day-to-day management of the company. However, there are certain exceptions under which liability may be extended to a fund or its affiliates in exceptional circumstances. Even though not expressly regulated, there are certain provisions under Romanian Company Law No 31/1990 that might be used as support for the application in practice of the legal doctrine of piercing the corporate veil, especially in relation to companies that undergo dissolution/liquidation. Such provisions set out that the shareholder who abuses the limited nature of his/her/its liability and the distinct legal personality of said company to the detriment of creditors is held liable (without limit) for the liabilities of the dissolved and/or liquidated company. Furthermore, the liability of said shareholder becomes unlimited under such terms, especially when the shareholder disposes of the company assets as if they were his/her/its own or diminishes the company assets to his/her/its own personal benefit, or for the benefit of third parties, knowing or having to know that, in this manner, the company will not be able to fulfil its obligations.

Separately, the tax and insolvency legislation also provide that a shareholder can be held liable, together with the target company, if the shareholder has triggered a state of insolvency of the company through acts such as disposal of, or hiding in bad faith, in any form, the target company’s assets, or has decided to continue an activity that was obviously leading the company towards cessation of payments for personal interests.

In practice, Romanian courts have been cautious in applying these exceptions and will only disregard the corporate form in exceptional circumstances involving fraud, abuse of rights or asset-stripping behaviour. Accordingly, while the default rule protects the fund’s limited liability, sponsors must remain attentive to governance and conflict-of-interest issues, particularly in distressed scenarios.

The typical holding period for private equity transactions is five years. The exit is usually made through a competitive sale process. The most common form of private equity exit continues to be trade sales (ie, sales to strategic investors) and secondary transactions (ie, sales to other financial investors). Other typical forms of private equity exits, such as initial public offerings (IPOs) and dual-track transactions (ie, an IPO and a sales process running concurrently) are practically non-existent. As mentioned, IPOs are quite rare on the Romanian market and are usually implemented by strategic players, and not in private equity transactions.

Depending on a number of factors, including the opportunities available on the market, private equity sellers may decide to reinvest in Romania.

Equity arrangements usually contain drag rights in favour of private equity funds. A sale of at least 50% of the portfolio company would constitute the typical drag threshold, but the exact percentage will depend on the portfolio company’s actual ownership structure as well as the parties’ relative bargaining power. The private equity owner obviously needs to consider that the percentage needed to trigger its drag right will also most likely become the threshold to trigger the minority shareholder’s tag right.

Management shareholders usually enjoy tag rights when the private equity fund is selling its participation, especially if such shareholder arrangements otherwise contain drag mechanisms for the benefit of the controlling shareholder. A sale of at least 50% of the portfolio company would constitute the typical tag threshold, but the exact percentage will depend on the portfolio company’s actual ownership structure as well as the parties’ relative bargaining power.

IPOs are not common on the Romanian market, mainly because the large majority of companies and businesses in Romania are not organised as publicly traded companies. Businesses are usually set up as (non-listed) limited liability companies or joint stock companies, and investors usually buy the entire participation or a majority stake in such companies. Therefore, it will be hard to pinpoint any specifics for exits by way of IPOs on the Romanian market.

The IPO of Hidroelectrica (the leading electricity producer in Romania) in July 2023 was the largest initial public offering ever made on the Romanian stock market, the largest in Europe in 2023 and the third largest in the world that year. The IPO had a value of approximately USD2.1 billion.

In May 2024, Romania witnessed a new IPO, also in the energy sector. The listing of Premier Energy, worth approximately, EUR140 million, marked the largest IPO by a privately owned company on the Bucharest Stock Exchange in the past five years.