The record year for M&A transactions, the emergence of new startups, and a new draft on company law get lawyers talking in Lithuania, according to TGS Baltic Partner Dalia Tamasauskaite-Ziliene.
"Last year, in terms of general M&A, has been very busy," says Tamasauskaite-Ziliene. "In 2021, there was a significant increase both in numbers and the size of the transactions, making 2021 a record year. Overall, the beginning of this year also looked very optimistic, however, the war in Ukraine has made the business sector more cautious." According to her, while transactions have not stopped entirely and the market remains quite active, the upcoming months may not look as promising.
"In addition to traditional M&A, for the past few years we have also seen significant growth in the number of startups," she adds. "There are new unicorns in the market across the entire Baltic region, including Lithuania. We hope investors remain interested in our market, despite the war."
As for the legislative updates, Tamasauskaite-Ziliene points out that Lithuania’s major upcoming reform is related to company law. "The current legal framework does not meet the market requirements anymore," she explains. "The existing companies, as well as startups, have been pointing out certain issues related to it for several years already. Accordingly, we have a draft law aiming at making the corporate regulations more flexible and attractive, for instance, by enabling using different classes of shares. The introduced changes will hopefully contribute to attracting foreign investors." The draft law is being discussed, she says. "We still have to see if the changes are sufficient or if further updates are needed, based on their effect on the market."
Another major change in Lithuania, according to Tamasauskaite-Ziliene, is related to implementing ultimate beneficial owner regulations. "We have finally implemented the EU directive on UBO disclosure in practice," she says.
"In terms of the economy, some sectors are a bit more concerned than others," Tamasauskaite-Ziliene points out. "The year already started with significant inflation in Lithuania. The geopolitical situation and sanctions had, and will definitely continue to have, an impact on the economy. We already see that projects are taken more cautiously, calculating the potential impact of the war, sanctions, and their effect on supply chains." According to her, some investors – private equity, for example – remain active. However, "when it comes to construction or similar other projects that are about to start, they are a bit more hesitant. On top of that, certain other sectors, such as transportation, will definitely be more deeply affected."
Finally, Tamasauskaite-Ziliene says that market developments in the infrastructure and green energy sectors look very positive. "Deals related to green energy, wind, and solar parks were already very common, and will be active further, owing to the need to refocus the whole energy market and be independent of Russian energy supplies," she concludes.