"Despite the fewer transactions, 2025 was the year of the megadeal," Dinos Constantinou, Partner, Oaklins, suggests.
Speaking to GOLD magazine about the mergers and acquisitions trend that shaped last year, the expert explained, "While uncertainty resulted in fewer overall transactions, valuations defied risks, resulting in a record number of megadeals. Companies took advantage of buoyant markets, readily available financing and less stringent US regulation to attempt strategic transactions that would not have been possible before."
Among other things, Constantinou also noted, "Cyprus saw a significant increase in the number and size of transactions from strategic buyers and inbound investment."
2025 was defined by geopolitical conflict, shifting trade policy and market volatility. How did these forces affect deal flow and valuations on the global stage?
While uncertainty resulted in fewer overall transactions, valuations defied risks, resulting in a record number of megadeals. Companies took advantage of buoyant markets, readily available financing and less stringent US regulation to attempt strategic transactions that would not have been possible before. Despite the fewer transactions, 2025 was the year of the megadeal.
Did Cyprus largely track global M&A trends in 2025 or did local conditions, such as regulation and market depth, drive a different outcome?
Cyprus saw a significant increase in the number and size of transactions from strategic buyers and inbound investment, driven by three factors. First, Cyprus is enjoying strong economic growth, especially compared to the broader European landscape, making it attractive to regional and European companies. Second, negative headlines around government finances and AML are behind us – Cyprus now projects only good news. Third, historically, M&A in Cyprus was at extremely low levels so, in a way, we are finally catching up. It is also interesting that while we had substantially increased activity in transactions, outbound investments remain nil; we could not identify a single company acquiring a business overseas.
Which sectors and/or segments in Cyprus emerged as the most active or attractive for transactions and which, if any, look most promising going forward?
Financial and insurance services saw significant activity, with Bank of Cyprus acquiring Ethniki Insurance, Alfa Bank acquiring Universal and Altius and Eurobank taking over CPN Cyprialife – huge deals compared to previous years. I expect consolidation to continue, as companies face growing regulation and competition. Fast-Moving Consumer Goods (FMCG), though, had a quiet year. I expect much more activity going forward, as many importers with distribution systems struggle under current pressures. They need efficiency, which can only be achieved through mergers or acquisitions. Cyprus is also home to tech and digital companies with a global reach. These massively scalable businesses have also been particularly active in M&A and are expected to maintain it.
In today’s environment, when does M&A make strategic sense for Cypriot businesses and what benefits does it offer?
There are two ways to look at this. One is by sector: in insurance and FMCG, for example, too many companies compete in a difficult environment and M&A is the only way to achieve competitive scale. The other is internal: Cyprus has many second- and third-generation companies, for which selling was once a taboo.
Globally, only 3% survive to the third generation and Cyprus is no different. Families are finally considering exits or who among them will take control. When a family business matures and there are too many relatives, the decision-making process becomes next to impossible. This is a drag on the company and you cannot keep up with the competition. The third generation also has its own ambitions and no obligation to continue their grandfather’s work. We have discussions with many companies in this position but very few have made the hard choice. Competition, though, moves without pause.
Do you expect 2026 to resemble the dynamics of 2025 or is the market entering a different phase? If so, what will be the key drivers of that shift?
I expect 2026 to evolve differently from 2025 – or at least I hope so! – with three dynamics reshaping the landscape. First, irrespective of the industry sector, 2025 was an awakening for family businesses and many are likely to take a leap of faith in 2026. Cyprus has seen historic names disappear from lack of direction and M&A is now a solution. Second, Cyprus was never a target for private equity funds. For the last few years, we have been knocking on their door, offering them opportunities but they would not even talk to us, being too busy investing in Eastern Europe. Recent geopolitical conflicts have changed that; they are finally talking to us, though they remain on the sidelines. The next step is to start investing and, when that happens, it will be a game-changer for Cyprus. Third, some second- and third-generation companies have already made the change. I expect that these well-run companies will be involved in M&A not as sellers but as buyers. Some companies have solidified their position in Cyprus and an overseas expansion makes sense. Greece was always the assumed natural evolution or their only option but not anymore – it will not be the only country on their radar.
This interview first appeared in the January edition of GOLD magazine. Click here to view it.
