Croatia’s mergers and acquisitions market continues to exhibit remarkable dynamism, with strong activity across key sectors such as hospitality, healthcare, and alternative energy according to Tarja Krehic, Managing Partner at Krehic & Zornada, who also reports on legislative reforms aimed at aligning Croatia’s corporate governance and state-owned enterprise management with OECD standards.
"The M&A market remains vibrant, especially in the hospitality sector, where international investors continue to show strong interest," Krehic begins. She explains that Croatia’s appeal as a tourist destination has been a driving force behind this trend, with foreign capital flowing into hotel acquisitions and other tourism-related ventures. "The medical services sector has also emerged as particularly attractive,” she adds. "Transactions involving private polyclinics being acquired by private equity, strategic investors, and insurance companies are becoming increasingly common. This surge is largely fueled by growing consumer demand for private medical services, which has been amplified by inefficiencies in the public healthcare system,” Krehic notes.
Another sector experiencing rapid growth is energy, particularly alternative energy projects. “We’re currently involved in several transactions around Power Purchase Agreements,” Krehic reveals. Large corporations in industries such as hospitality, telecommunications, and insurance are increasingly adopting PPAs to enhance their EDG compliance. “Virtual PPAs, which are new to the market and Croatia’s regulatory framework, are beginning to emerge as a notable trend,” she adds. "Croatia’s abundant natural resources and favorable geographic position make it particularly attractive for solar and wind energy projects."
However, not all sectors are experiencing growth. Krehic points out that the IT sector has encountered recent setbacks due to geopolitical developments. “Newly announced U.S. tariffs targeting the EU have caused some companies to pause or cancel further acquisitions within Croatia and across Europe,” she explains. While IT was previously one of Croatia’s fastest-growing sectors, these external factors have slowed what was once significant momentum.
Turning to legislative developments, Krehic highlights 2025 as a transformative year for corporate governance in Croatia. “We have a new Companies Act and a revised Corporate Governance Code for companies listed on the Zagreb Stock Exchange,” she reports. These updates harmonize corporate governance practices with OECD standards, introducing modern structures and transparency requirements that aim to enhance investor confidence and operational efficiency. Additionally, "Croatia has finally aligned itself with the EU directive requiring listed companies to achieve a 40%/33% gender balance on supervisory and management boards. While some companies are resistant to these changes, this shift towards diversity is essential,” Krehic asserts. “It’s not only culturally significant but also financially beneficial.”
Finally, reforms are anticipated in the management of state-owned enterprises. “A new act governing SOEs is expected to be adopted by summer,” Krehic shares. This legislation is designed to "bring operations in line with OECD standards, focusing on transparency and modern corporate governance within Croatia’s sizable public sector – particularly in areas such as energy and natural resource management." She also notes ongoing privatization efforts targeting SOEs in cargo transport infrastructure. “Although privatization has slowed compared to previous decades, it remains driven by EU and OECD requirements," Krehic concludes.
