The first half of 2025 in Bulgaria’s corporate and M&A landscape has been characterized by a modest start amidst global economic and political uncertainties. Many export-oriented industries faced a challenging 2024, impacting the financial projections of potential targets. However, the outlook remains largely positive, fueled by major upcoming developments.
The Euro: A Catalyst for Confidence
A key driver for optimism is Bulgaria’s steadfast preparation for Euro adoption, with critical convergence assessments released in June 2025. A positive evaluation paved the way for Bulgaria to replace the lev with the euro as early as January 2026. This move is anticipated to have several positive effects on the economy and, consequently, on M&A activity. Euro integration is expected to further reduce currency risk for foreign investors, enhance price transparency, and foster greater economic stability and predictability. This, in turn, should bolster investor confidence, potentially lowering borrowing costs for both the government and corporations, and making Bulgarian assets more attractive to international strategic and financial buyers, particularly private equity and venture capital funds.
Navigating the Evolving Regulatory Landscape
Despite the positive macroeconomic outlook, M&A participants in Bulgaria must remain cautious in a dynamic regulatory environment that introduces both new compliance requirements and facilitators for transactions.
FDI Screening Legislation: A significant new hurdle for foreign investors is the implementation of Bulgaria’s FDI screening mechanism. While the legislation introducing this regime came into force in March 2024, the obligation for foreign investors to file for clearance did not become effective immediately. This is now expected to change in the second half of 2025, as the executive branch has recently re-published for public consultations draft amendments to the Implementing Regulation of the Investment Promotion Act. This is the final legislative piece which will introduce the necessary specifics on the implementation of the regime and will allow for the election of the Interdepartmental Council on FDI Screening.
Once fully operational, foreign investments that meet certain criteria (e.g., acquiring at least 10% of a target in specific sensitive sectors, or exceeding an investment amount of EUR 2 million) will require prior clearance when involving non-EU persons or entities controlled by non-EU persons. This new layer of scrutiny, especially given the expected limited transparency on the Council’s decision-making process, will inevitably impact timing and structuring and will necessitate thorough strategic planning for affected transactions.
EU Accessibility Directive: Another regulatory layer to consider in M&A due diligence was introduced in April 2025 with the implementation of the EU Accessibility Directive. This directive significantly impacts a wide array of businesses that manufacture or provide products and services within the EU. It mandates that products like computers, smartphones, ATMs, and services such as e-commerce and banking services comply with specific accessibility requirements. Companies involved in M&A in these sectors will need to assess the target’s compliance with these new regulations, as non-compliance can lead to financial penalties and reputational damage.
Investment Promotion Act Amendments: In May 2025, significant amendments to the Investment Promotion Act were passed, aiming to further ease investments in Bulgaria. These changes include, among others, a reduction of the threshold for an investor’s minimum project co-participation with own capital or attracted financing from 40% to 25% when applying for an investment certificate. Additionally, the amendments introduce accelerated administrative services and streamlined procedures overseen by the Invest Bulgaria Agency and local mayors, further reducing bureaucratic hurdles for investors.
The Role of Key Regulatory Bodies: The Competition Protection Commission
The Bulgarian Competition Protection Commission (CPC) remains a crucial regulatory body in the M&A landscape. With new members recently elected, the market is observing how the CPC’s approach might evolve. Historically, the CPC has been characterized by a tendency to approve transactions without extensive second-stage investigations or prohibited transactions. There have been very few controversial cases where a transaction was blocked. As of now, the new composition suggests a continuation of political consensus in appointments, meaning that major shifts in the commission’s policy are not immediately expected. This predictability, while sometimes raising questions about the depth of assessment, offers a degree of certainty for M&A parties.
By Pavel Hristov and Dragomir Stefanov, Partners, Hristov & Partners
This article was originally published in Issue 12.5 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.
