How M&A Deals Are Shaping a New Business Reality in the Baltics

The number of mergers and acquisitions (M&A) in the Baltic business environment has grown significantly. More and more companies are opting for mergers and acquisitions to expand their market or customer base, acquire new technologies or expertise, increase company value and efficiency, and reduce competition. According to data compiled by the law firm Ellex, 231 deals worth a total of €2.1 billion were registered in the Baltics last year—a significant increase compared to the previous year. More than half of these transactions were carried out by local companies. The IT sector is no exception, having seen several large-scale M&A deals in recent years.

Globally, while the M&A market didn’t reach the volumes predicted by many experts, the results improved significantly. The total value of deals grew by 12% compared to 2023, reaching $3.4 trillion USD, according to a report published by consulting firm McKinsey & Company in February this year. Although geopolitical risks may threaten this upward trend, forecasts suggest that the M&A market may continue to experience significant changes in the next six to twelve months.

Last year saw a major increase in M&A activity in the technology, media, and telecommunications sectors—75% of deals by number and 59% by value were related to technology, particularly software development companies. The report indicates that the tech subsector will maintain its leading role in 2025, both in terms of the number and value of deals, with companies and investors focusing on market leadership, growth through capital investment, artificial intelligence, and broadening service offerings.

Local Market Players Seizing Opportunities

This growth in M&A activity is evident not only globally, but regionally as well. The increase in domestic transactions reflects the strengthened financial position of Baltic companies and the growing involvement of local private capital. While geopolitical uncertainty has made international investors more cautious, local players have successfully leveraged opportunities for regional growth and strengthening their positions in the Baltics. This raises the question—what are the advantages of M&A deals, and do company clients benefit as well?

Existing Shareholders Often Stay On

Helmes Group follows this approach for several reasons. By acquiring or merging with an existing company—essentially adding another partner to the group—the company strengthens its competencies and expands its range of services while ensuring global access. In 2022, the group acquired 70% of Lithuanian company TeleSoftas, 75% of Estonian software company Trinidad Wiseman in 2023, and this year, all shares of Estonian company Infovara. Notably, M&A transactions do not always require acquiring 100% of shares—often, existing shareholders stay and continue their work.

Flexible and Responsive to Market Fluctuations

Although these companies join the same group and share values, organizational culture, and approach, each partner retains autonomy—for example, in choosing clients and team members. This prevents the formation of a heavy corporate structure and enables the group to attract entrepreneurial individuals who want and are able to make decisions. This model offers other benefits too—each partner can respond quickly and flexibly to national market fluctuations, adjust salary levels, and more. At the same time, support functions like marketing, HR, and legal services are shared across the group, allowing cost optimization. Clients also benefit by gaining partners with deep local market understanding and international experience, even in highly specific areas. Since many of our client relationships have lasted more than ten years, it’s clear that this blend of competencies is valuable and appreciated.

Partnership Based on Shared Values

For this model to work and to implement the “think globally, act locally” approach—which is not always possible in large international corporations—it is crucial for the company to be cohesive, with shared values, culture, and philosophy. Of course, each country’s company will differ due to market characteristics, but the core values must align. This is a key aspect when looking for new partners. Currently, we are actively seeking companies in Latvia, Poland, and Germany to join our group, and we carefully assess organizational cultures to find those with similar mindsets. For clients, this means a more personalized approach and closer cooperation with partners who know the local market and its specifics well, while also offering access to a broader range of competencies, innovative solutions, and international experience.

The rising M&A activity in the IT sector and the market overall signals a shift toward a new business reality where local companies are becoming more strategic, focused, and open to collaboration. M&A deals not only expand market presence and bring in new expertise but also help create more sustainable and competitive businesses that can adapt flexibly to changing conditions. This trend supports the development of the professional ecosystem in the region and provides clients access to a wider range of services and knowledge with international added value.