The Belgian takeover market is currently undergoing a full transformation. Three experts from the independent law firm, ALTIUS, share their insights about the new dynamics in the field of mergers and acquisitions (M&A). “We see clear links with restructurings, bankruptcies, and the evolution of the real estate market.”

The new dynamics currently driving the takeover market in our country are the result of various factors. “In the past 18 months, we have seen as many distressed M&A transactions as in the previous five years,” says Jérôme Vermeylen, Corporate and M&A Expert at ALTIUS. More and more companies are getting into financial trouble due to more expensive and difficult financing, as well as (macro-)economic developments. “This is doubly true for retail and hospitality.”

New rules, new tools

The changed Belgian regulations on insolvency and restructurings, partly influenced by European directives, are playing an important role in this dynamic. “Companies now have access to various new restructuring tools,” says Bart Heynickx, Insolvency & Restructuring Expert at ALTIUS. These include so-called pre-packs, where a company in financial difficulty, shortly before its formal bankruptcy, reaches an agreement with a potential buyer with the aim of restarting activities after bankruptcy. Furthermore, new confidential procedures, including negotiations with creditors, offer higher chances of success. Finally, additional possibilities have been provided for so-called large companies. “These and already existing tools are now being used more and more, and we have are advising clients in each of these scenarios,” says Bart Heynickx.

Opportunities for real estate

“Restructurings and failures of large business groups also create new opportunities for the real estate market,” explains Lieven Peeters, Real Estate Expert at ALTIUS. This is especially true for companies where the real estate is housed in a different group company than the business activities.

“Take, for example, Makro, whose store activities have gone bankrupt, or bus manufacturer, Van Hool: in both situations, the real estate is part of a different group entity. These sites are now being actively marketed.”

Transactions are being completed

Where the first half of the year still showed cautious optimism in the M&A market, this has given way to stronger dynamics since the summer. “And unlike the previous two years, many of these deals are not being prematurely terminated but are actually going through”, notes Jérôme Vermeylen.

The previous ‘cold feet’ have given way to genuine interest and more realistic expectations among both buyers and sellers. However, there is still no talk of any euphoria. “Compared to 2020-2021, we have evolved from a seller’s market to a more balanced market,” analyses Jérôme Vermeylen. “Except for the best targets, we see far fewer sales processes (auctions) where multiple potential buyers are trying to outbid each other through a bidding process. This makes it more attractive for buyers to negotiate one-on-one.”

Borrowing money remains quite expensive

Despite recent interest rate cuts, financing costs remain relatively high compared to a few years ago. This also impacts the takeover market and the real estate sector. Lieven Peeters: “If large developers are unable to continue their activities and projects, supply decreases and the market shrinks.” Combine this with increased construction costs and significant sustainability investments, and there are many inhibiting factors to overcome today.

“High inflation has further led to rising rental prices and rising (wage) costs. Together, these lead to potential payment and insolvency problems, which are visible in, for example, retail and hospitality. This completes the circle,” emphasizes Bart Heynickx. Nevertheless, there are still many opportunities. “Traditional offices and shopping centres are under pressure, but segments such as logistics, SME units, data centres, and student residences have not yet fallen into a real estate dip,” concludes Lieven Peeters.