On the one hand, one might say that selling companies is the same anywhere in the world, and there is some truth to this: intellectually, the concepts are the same, the steps to the process are the same, and the reasons for transactions succeeding or failing have common elements all over the world.  Having worked on transactions covering more than 40 countries, I can testify to these similarities.

And yet, on the other hand, there are distinct differences to doing deals in Central Europe. It is, however, hard to put my finger on exactly what these differences are.  Perhaps it has something to do with the 50 years of Soviet occupation of most of the region. During this era, there was no mergers and acquisitions (M&A) industry in Central Europe; there was a general lack of financial, marketing and other skills; there was a prevailing value that "information was power", and one held his or her cards very close to the chest, only revealing the minimum necessary information. Without giving an exhaustive list of all the unique characteristics of Central Europe, in contrast to North America or Western Europe, a few of them are worth mentioning.

Good information about companies is much harder to obtain. For example, fewer companies, even of comparable size, have sophisticated Management Information Systems.
Regulatory regimes are not as developed. While most Central European countries have converged considerably with EU laws and institutions, there are often still gaps in enforcement or interpretation of regulations. Debt collection in Croatia, for example, is remarkably poorly developed.

Tax laws in most Central European countries are typically not as well conceived, are changed much more frequently, and their enforcement is more uneven.

The authorities perhaps have more discretionary powers, making it harder to predict risks.

There is also a much more prevalent grey economy than in Western Europe or North America. This means there is a need to look very carefully at companies that are being purchased, doing a very thorough due diligence.  It also means that if an investor buys a company operating perfectly legitimately, it may experience unfair competition from those that are not.

For anyone attempting to do a cross-border deal in Central Europe, there are also a great deal of significant cross-cultural elements to doing a deal. The cultures of every single Central European country are highly unique. This is, of course, just as true for Western Europe.

Language in cross-cultural deals is another potential dimension of complexity.  Recently, for example, I was involved in one deal that was negotiated in four languages.

Deals in Central Europe are typically smaller: market size is typically small, and few companies have become global or even regional.

Transactions typically take longer, due to the additional elements of complexity posed by the aforementioned factors.

So, as you can see then, doing deals in Central Europe has a flavour of its own. I do not at all mean this as a negative point. Doing a smaller mid-sized deal can be more exciting and intellectually stimulating than much larger deals in more developed markets. 

From the perspective of multinationals and private equity firms, because Central Europe is generally undergoing much faster growth than Western Europe, a fact likely to remain the case for the coming decade or two, but the additional complexity may be worth the effort.

There is also a convergence taking place. Deal sizes in Central Europe are becoming larger and ever-increasing numbers of people are conversant in English, tax laws and regulations are gradually becoming clearer and their enforcement more predictable. I have seen a huge evolution over the past 20 years, but it will probably take at least another 20 years before Central Europe fully converges  with Western Europe.
 
*Les Nemethy is the CEO of Euro-Phoenix Financial Advisors Ltd. (www.europhoenix.com), a Central European corporate finance company focused on mergers and acquisitions.