The war in Ukraine will have repercussions but will not harm the Baltic investment and transaction climate in the long run, market participants seemed to agree at the Baltic M&A and Private Equity Forum held on 7 April and co-organised by Sorainen, Äripäev and EstVCA.

“There is going to be an extended period of reorientation,” noted William Wells, Managing Director at Rothschild. “Still, disruption of the supply chain will be sorted out, as substitution and reorganisation will happen.” The war will certainly affect the valuations and increase inflation pressures, market experts predicted.

Deals revisited: Linas Agro and Fortum

M&A forum traditionally sheds light on some of the most exciting deals of the past year. Andrius Pranckevičius, Deputy Chairman at Linas Agro Group and CEO at Kauno Grūdai was in charge of Linas Agro’s acquisition of KG Group, one of the largest business acquisitions in the history of Lithuania that provided plenty of learnings.

Pranckevičius emphasised that every dealmaker must be ready for last minute challenges. He told the audience how the seller of KG Group called on the night after the closing with a new condition, namely telling Linas Agro not to disclose the sales price unless they want to leave without a signed deal. It took a great effort from the agricultural giant to call back releases the night before the public announcement to delete the price information.

Pranckevičius also noted that the entire market was expecting a higher price than the one finally agreed on. “My learning is, you don’t know the final price. At first, my own board members said we will not have money, but the final number was smaller than anyone expected,” he shared.

The case of Fortum divesting its Baltic district heating business was covered by Julijus Grigaliunas, Partner at Porta Finance. He talked about how the epidemic changed the process overnight, creating new challenges for carrying out the deal. “Partners Group never saw the sites until they bought them; the sites were filmed with 3D cameras,” he told the forum audience.

Grigaliunas also described the dramatic morning when Fortum CEO went in front of the cameras at 10am on the morning of the annual results presentation, with the transaction still being finalised. It was in effect done no earlier than during the very press conference. “Toomas will remember my phone call at 4am that morning, thanks for picking it up,” Grigaliunas turned to Sorainen partner Toomas Prangli referring to the intense day.

Impact investing gaining momentum

The forum’s slogan this year was “Putting capital to good use”, referring to the rise of wealth in the Baltics looking for a meaningful mission. A panel was dedicated to impact investing, with Alison Fort of Katapult Foundation explaining that impact investors are set apart by intentionality, measurability and additionality. Fort noted that companies who are interested in making a positive impact on society and struggle to measure their efforts are often best off with some simple metrics that aligns with their business model, eg carbon footprint, water saved, lives touched, or impact made on young people.

Bolt’s co-founder calls for doing good

Bolt’s co-founder Martin Villig does a lot of his work with the Good Deed Foundation, Estonia’s first and only venture philanthropy organisation, and also belongs to the 1700-member international network Founders’ Pledge.

Villig currently focuses largely on education and the quality of leadership in the sector. “If you look at companies that are growing fast, you need good leadership. When companies stand still it also comes down to management. It is the same with schools,” he explained.

One successful project has been sending school headmasters on 2-3 month internships to learn from private companies with great leadership culture. 36 Estonian school directors of about 500 have graduated from the programme. A substitute teacher platform has also been launched that effectively serves as a channel to get new teachers to the aging teacher pool.

Villig noted that the mindset of giving back has become quite common in the country’s tech community; close to 40 founders have supported the Good Deed Education Fund alone. Villig has also invested in two start-ups working on reusable packages, but says overall it is too early to expect financial returns from impact investing in the Baltics.

Baltic M&A and Private Equity Forum

Baltic M&A and Private Equity is the nr 1 networking event for the Baltic M&A industry and market participants interested in the region. Every year, the forum gathers over 200 participants.

The Baltic M&A and Private Equity Forum 2022 was organised by Sorainen, in cooperation with Estonia’s leading business media house Äripäev and Estonian Private Equity and Venture Capital Association. The forum is organised annually in one of the three Baltic countries in partnership between Sorainen and the Baltic business media (Äripäev in Estonia, Verslo žinios in Lithuania and Dienas Bizness in Latvia) and the Baltic venture capital associations.

Check out: Advice from unicorns

Davis Siksnans, Co-Founder and CEO of Printful, Latvia’s first unicorn

  • Go outside the Baltics as soon as possible. If your idea didn’t work here, it might work in the United States.
  • Marketing should follow right after building the minimum viable product. Many founders are focusing on product, but once you build that MVP, you should focus equally on marketing.
  • Do not overlook HR. Hire native speakers.
  • Credibility matters – such as having an address or jobs link on the first page. It will greatly increase the conversion rate, yet is often overlooked.

Martin Villig, Co-Founder of Bolt, fan of impact investing

  • The book that changed me was “Doing good better”. It tells you about effective altruism and how your one dollar is making the most impact.
  • Donate money, but also skills, time and employees. Dedicate some of your time to charities. Check out Founders Pledge, the Good Deed Foundation and similar organisations.