Chamber Practice Guide: Corporate M&A 2025. Trends and Developments

High-Level Overview of the Ukrainian M&A Market in 2024

The Ukrainian M&A market continued its gradual recovery in 2024 despite the ongoing war, economic difficulties and investor concerns. While geopolitical instability remains a major challenge, businesses and investors have shown resilience, seeking opportunities amidst uncertainty. The overall M&A landscape has been shaped primarily by market players’ adaptability and strategic M&A transactions.

Capital controls imposed by the National Bank of Ukraine to preserve currency stability and international reserves have stimulated domestic M&A transactions. With restrictions limiting the outflow of funds, businesses with surplus capital have sought opportunities to reinvest within Ukraine. In addition, the relocation of businesses from frontline regions has increased demand for acquisitions in western and central Ukraine, creating new opportunities for both domestic and foreign investors. At the same time, some Ukrainian companies have been exploring outbound M&A deals, seeking growth and diversification beyond the country’s borders.

The business environment has been significantly impacted by a workforce shortage due to employee mobilisation and emigration, rising debt burdens, higher production costs and increasing tax pressures.

Certain sectors have traditionally emerged as key areas for strategic investments in Ukraine, particularly technology, construction, infrastructure and agriculture. These sectors have once again proven to have potential for growth and stability, attracting investors eager to tap into Ukraine’s long-term recovery prospects. Ukraine’s defence sector has also seen significant expansion, driven by increased domestic production and strategic joint ventures with European arms manufacturers.

A notable trend in 2024 was the stability of M&A activity in terms of both deal volume and value. Despite challenges, the market remained largely in line with 2023 levels. This signals cautious optimism, as investors continue to navigate risks while seeking strategic opportunities to strengthen their market position, improve operational efficiency or diversify their portfolios in anticipation of future growth. Although high-value transactions have remained infrequent, and Ukraine’s M&A market continues to represent only a small portion of the global M&A landscape, smaller deals have played a crucial role in sustaining M&A activity in Ukraine.

Furthermore, there has been a notable increase in interest from investors strategically focusing on specific industries that may provide a clearer path to post-war growth, such as infrastructure and agriculture. This preference for more strategic investments suggests that investors seek to mitigate the risks associated with the ongoing armed conflict while still capitalising on the potential upsides of Ukraine’s recovery.

Key driving sectors of Ukrainian M&A activity in 2024

In 2024, certain industries demonstrated remarkable resilience and continued to attract investment.

The IT sector remains one of the least disrupted industries in Ukraine, with companies leveraging global demand for digital transformation services, minimum reliance on physical footprint and flexible working conditions. A prominent example is the USD200 million capital raise by Creatio at a USD1.2 billion valuation.

The agricultural sector continues to be a cornerstone of the Ukrainian economy, offering significant opportunities for investment despite ongoing challenges. As one of the world’s largest grain producers, the country remains vital to global food security, and its rich farmlands attract investors seeking long-term growth. A notable example is the recent investment by Saudi Agricultural and Livestock Investment Company (SALIC) in MHP SE, a food and agrotech company that is the leading producer of poultry in Europe and one of the largest producers of grain and vegetable oils in Ukraine. This deal underscores the sector’s resilience and the confidence of international investors in Ukraine’s agricultural potential. With the land law reform, technological advancements and increasing global demand for sustainable food production, agriculture is positioned to be one of the key sectors of M&A activity in Ukraine for years to come.

M&A activity in Ukraine’s infrastructure and construction sector in 2024 was largely driven by a mix of necessity and strategic opportunity. While speculative investment remains limited, there has been a notable focus on logistics. For example, the acquisition of the West Gate Logistic complex near Kyiv by retail chain Avrora from Dragon Capital highlights the ongoing demand for strategically located logistics facilities. In addition, the commercial real estate market has remained an attractive investment, with investors focusing on assets that offer stability and long-term potential. The targeted approach to logistics and commercial real estate demonstrates investor confidence in specific market segments.

Venture capital transactions continued to gain momentum in Ukraine’s defence industry in 2024, with a growing focus on start-ups developing cutting-edge military technologies. In particular, FPV drone manufacturers have emerged as a key area of interest for investors, reflecting the increasing role of unmanned systems on the battlefield. Defence-related investments are expected to grow, aligning with Ukraine’s broader strategy to enhance its military capabilities.

Alongside this trend, the Ukrainian government has intensified efforts to strengthen domestic arms production through strategic joint ventures with Western defence companies. These collaborations bring in foreign investment and technical expertise, accelerating the modernisation of Ukraine’s defence infrastructure and expanding local manufacturing of advanced weaponry. By fostering innovation and self-sufficiency, these initiatives aim to create a more resilient and sustainable defence industry capable of supporting both immediate wartime needs and long-term security objectives. As Ukraine continues to develop its defence sector, these trends may unlock new investment opportunities and drive increased M&A activity in such sector.

Other sectors showed somewhat limited M&A activity, although there were notable deals in the telecommunications, retail, financial and energy sectors, such as:

• the acquisition by NJJ Holding of Datagroup-Volia;
• the acquisition by Ukrnafta of a 51% stake in Shell’s subsidiary in Ukraine;
• the signing of the share purchase agreement for the acquisition by TAS Group of Idea Bank from Getin Holding; and
• the acquisition by Elementum Energy of a majority stake in Windpark West-R LLC.

Large-scale privatisation

Ukraine’s privatisation programme has been a significant driver of M&A activity in 2024. The government continues to auction off state-owned assets to improve efficiency, transparency and private sector participation in the economy. Focusing on attracting both domestic and foreign investors, privatisation efforts have provided businesses with opportunities to acquire strategic assets at competitive prices, despite the ongoing armed conflict and economic uncertainties.

The government’s commitment to privatisation stems from multiple objectives, including replenishing the state budget, reducing the financial burden of underperforming state-owned enterprises, increasing tax revenues, and fostering economic growth through private sector investment. The online auction system, designed to ensure fairness and transparency, has facilitated a number of transactions across various industries.

Notable privatisation deals in 2024 include the sales of JSC United Mining and Chemical Company (one of the largest titanium producers in the world), Kozatskiy Hotel and Ukraine Hotel, both located in central Kyiv.

Looking ahead, several high-profile assets are expected to be privatised. Among them is Ocean Plaza, one of Ukraine’s largest shopping and entertainment complexes, located near Kyiv’s historic city centre and known for its contemporary design and prime commercial appeal. In addition, the anticipated privatisation of Demurinsky Mining and Processing Plant (a leading developer of an alluvial titanium-zircon deposit in the Dnipropetrovsk region since 2006) underscores the government’s desire to attract a serious strategic investor in Ukraine’s titanium industry. Another key asset awaiting completion of the privatisation procedure is Aeroc LLC, one of Ukraine’s major producers of aerated concrete products, with production facilities in the Kyiv and Lviv regions, further highlighting investment opportunities in the construction materials sector.

Risk allocation in wartime M&A

Similar to the M&A trends observed in 2023, investors remained risk-averse in 2024 when considering acquisitions in a country at war.

Although the Ukrainian M&A market continues to favour buyers, sellers remain reluctant to divest their businesses at significant discounts. As a result, contractual instruments for mitigating risks remain crucial for:

• Ukrainian businesses seeking external investment;
• sellers aiming to exit or attract foreign partners at a fair price; and
• investors striving to protect and maximise returns.

Contractual mechanisms continue to be the primary tool for risk mitigation in M&A transactions. In 2024, the following trends remained popular in M&A deals in Ukraine:

• structuring the purchase price in multiple instalments, with deferred payments contingent on specific post-completion conditions;
• a preference for using pre-completion or completion accounts as pro-buyer mechanisms for purchase price adjustments;
• careful drafting of material adverse effect, force majeure and hardship clauses to provide buyers with clear exit options should the war or other external factors disrupt the deal before completion; and
• greater focus on compliance warranties, particularly regarding compliance with sanctions and anti-bribery and anti-money laundering laws.

Several key matters have gained heightened attention in M&A negotiations, including:

• sellers’ attempts to impose heavy restrictions on buyers’ exit rights before completion based on deal certainty considerations, while buyers insist on broader exit options – given Ukraine’s evolving geopolitical and military landscape, the material adverse effect clause remains one of the most contentious provisions;
• risk allocation in the event of government expropriation or nationalisation of certain assets of the target for military needs; and
• extended limitation periods, considering the suspension of statutory limitation periods due to martial law in Ukraine.

In addition to contractual mechanisms, investors in Ukraine may have access to various war risk insurance programmes, such as those provided by the Multilateral Investment Guarantee Agency.

Furthermore, the Ukrainian government has introduced war risk insurance products to boost investor confidence and encourage capital inflows. The Export Credit Agency (EKA) of Ukraine has launched insurance offerings to protect investors against wartime and political risks, targeting export-oriented businesses. These products cover direct investments and loans for infrastructure and export-related projects. Supported by recent legislative changes, such measures provide an additional layer of protection alongside traditional contractual safeguards. By offering such insurance, the Ukrainian government aims to enhance the country’s attractiveness as an investment destination, fostering both foreign and domestic capital inflows into key economic sectors.

Despite these initiatives, war and political risk insurance programmes remained uncommon in Ukrainian M&A transactions in 2024. While they offer valuable protection for certain investments, their adoption by market players has been limited.

Cautious optimism for Ukraine’s M&A market in 2025

Ukraine’s M&A market in 2025 is poised for cautious optimism, with deal activity likely to be influenced by geopolitical developments, economic stabilisation efforts and investor sentiment. While uncertainties persist, the resilience demonstrated in 2024 provides a solid foundation for potential growth and the evolution of a more mature and strategic M&A ecosystem in the coming years. Building on the trends observed in 2024, M&A activity in Ukraine is expected to remain concentrated in key sectors such as IT, agriculture, infrastructure, logistics and defence in 2025.

Several key factors will influence the trajectory of M&A activity in Ukraine in 2025.

• Macroeconomic stability and rule of law reforms – continued efforts to stabilise the economy, strengthen institutions and improve the rule of law will be critical in maintaining investor confidence. Legal reforms, particularly in law enforcement, the judiciary and anti-corruption measures, will play a decisive role in determining Ukraine’s attractiveness as an investment destination.
• Geopolitical risks and security considerations – the trajectory of the war and broader geopolitical shifts will remain the most significant determinants of M&A activity. Investors will closely monitor developments such as Western military and financial support, potential peace negotiations and regional security risks, which could influence investment decisions and risk assessments.
• Large-scale privatisation – the Ukrainian government’s commitment to large-scale privatisation is expected to unlock new M&A opportunities across multiple sectors, including infrastructure and industrial production. The sale of state-owned and nationalised assets, including those previously owned by sanctioned Russian entities and individuals, could attract domestic and foreign investors seeking strategic acquisitions.
• International financial support and Western market Integration – sustained engagement with international financial institutions (such as the IMF, EBRD and World Bank) and Ukraine’s ongoing alignment with Western markets, particularly in the context of EU accession efforts, will be crucial in shaping the investment climate. Access to funding and war insurance mechanisms could facilitate M&A transactions and mitigate investor concerns over long-term stability.

The adaptation of businesses to new realities, combined with investors taking a strategic and long-term view, sets the stage for sustained, though selective, M&A activity in the coming years.