Three things top of mind for private M&A practitioners in the Czech Republic are: 

• Commercial: valuation expectation gaps
• Legal/general: legal due diligence
• Legal/general: transaction structuring

We see in our practice that a cautious approach of both sellers and buyers appears to persist in the Czech Market, with both parties very consistently evaluating and negotiating whether and under what conditions it makes sense for them to carry out a given transaction. This is reflected, among other things, in the buyers' requirements to conduct detailed due diligence checks on the target companies and complex discussions on the purchase price, which the parties often have significantly different ideas about.

In addition, the Czech market is beginning to make more frequent use of transaction insurance products (especially W&I insurance), which were previously common rather than only in private equity transactions. This is also due to the new and more affordable products that are emerging in the Czech market, which could make sense even in the context of medium-sized domestic transactions, especially from the sellers' perspective.

Most private M&A deal activity is categorized as mid-market. 

Most private M&A deal activity is seen in the Technology, Media and Telecommunications sector. 

Private M&A deal volume in 2024 is predicted to be less than 2023 deal activity, based on publicly available information, and with a caveat that it is always difficult to predict future development, there were several exceptional transactions on the Czech market in 2023 (e.g., in the energy sector) and generally, the activity on the market appears to be gradually slowing down (despite usual seasonal peak at the end of 2023).

With the understanding that with respect to public M&A, similarly as in previous years, the scope/number of potential targets is rather limited and public M&A deal activity in the Czech Republic in all sectors is rather low, three things top of mind to public M&A practitioners would be: 

• Commercial: valuation expectation gaps
• Legal/general: legal due diligence
• Legal/general: transaction structuring

With respect to public M&A, similarly as in previous years, the vast majority of potential targets in the Czech Republic are generally top-tier companies and thus also most deal activity (if any) takes place in the same (top-tier) market.

With respect to public M&A, similarly, as in previous years, the scope/number of potential targets is rather limited and potential targets often operate in different sectors. At the same time, public M&A deal activity in the Czech Republic in all sectors is rather low (to the best of our knowledge).

Public M&A deal volume in 2024 is predicted to be the same as 2023 deal activity, based on publicly available information, public M&A deal activity in all sectors is rather low in the Czech Republic and we do not expect a significant increase in 2023.

In 2024, the Czech M&A market will probably continue to be influenced by the level of interest rates. Another important factor is the new tax consolidation package, which, among other things, introduces a limitation on the personal income tax exemption for the sale of shares in corporations, with a delayed effective date of 2025. Under the previous regulation, if the seller - an individual - has met the so-called time test, i.e. has owned shares for at least three years or an ownership interest in the limited liability company for at least five years, he or she did not pay income tax on the sale of such shares. Simply put, the forthcoming tax package changes this rule and introduces a maximum amount of CZK 40 million per taxpayer per taxable year to exempt such income when the time test is met. This change may motivate many existing individual owners to sell their companies before the end of 2024 (under the current - more favorable - tax regime).