No need to rush. How the Russian M&A market is adapting to changes in the Economy

Since February 2022, the structure and state of the economy and the regulatory environment have undergone radical changes, impacting the domestic mergers and acquisitions (M&A) market. According to estimates by Mikhail Filatov, Counsel at ALUMNI Partners, and Anton Panchenkov, a Partner at the firm, the average time required to finalize a deal has increased from four months in 2022 to seven or eight months in 2024. This trend may indicate a gradual stabilization of business conditions.

A key trend in 2023–2024 has been the significant decline in the number of M&A deals driven by the exit of companies from "unfriendly" countries from the Russian market. We have observed this in our own practice: while such transactions accounted for 71.4% of all M&A deals we handled in 2022, that share dropped to 25.8% in 2023 and to 17.7% in 2024.

This trend is continuing into 2025; data from the first quarter indicates a further decline in interest among foreign investors in divesting from Russian assets. Investment bankers confirm this trend as well; for instance, analysts at Advance Capital note a sharp decrease in the number of deals involving foreign players in their review of the M&A market.

This is largely because the majority of key investors from so-called unfriendly countries who wished to exit Russia had already left the market during 2022 and the first half of 2023. Furthermore, the regulatory requirements for approving such deals have changed; these rules were significantly tightened in 2024. Faced with new requirements to pay an "exit tax" and apply a 60% discount to asset market values, foreign players who had previously planned to exit the Russian market with minimal losses have either paused until exit conditions become more favorable or abandoned their plans altogether. This shift was also facilitated by the slight softening of foreign policy rhetoric observed in the spring of 2025.

Focus on the domestic market

At the same time, the growth of available liquidity in the Russian market and restrictions on outbound capital investment over the past three years have spurred domestic investors to actively acquire assets. For their part, business owners have gained the opportunity to sell their businesses profitably or attract new financial or strategic partners. The majority of these domestic investment deals between 2022 and 2024 were concentrated in the IT and real estate sectors. Notably, the parties involved have virtually ceased using English law and foreign infrastructure for transaction documentation practices that were popular prior to the imposition of massive sanctions against Russia. Sanction-related risks and restrictions, combined with Russian businesses' disillusionment with foreign dispute resolution venues, have led to the dominance of Russian law and the selection of domestic arbitration centers when structuring deals.

However, since late 2024, both we and our colleagues have observed a marked slowdown in M&A activity within the Russian market. This trend is largely driven by the high cost of funding for buyers due to the elevated key interest rate and persistent market uncertainty regarding the timing and pace of future rate adjustments. Moreover, a significant number of businesses have put strategic investment decisions on hold, awaiting changes in the foreign policy environment.

New deal terms

The parameters of M&A negotiations and the terms of binding transaction documents have also shifted significantly. In ALUMNI Partners’ transactional practice, the average duration of the negotiation process for a deal was approximately four months in 2022. However, for transactions handled by the firm in 2023 and 2024, this figure rose to seven or eight months, a timeframe generally characteristic of the pre-2022 M&A market.

The parties' focus has shifted from a desire to close deals as quickly as possible to a willingness to undertake a longer process, concentrating instead on the detailed structuring and terms of the transaction. In practice, we observe an increasing willingness among parties to include extensive warranties for the buyer’s benefit and significant mechanisms for limiting the seller’s liability in the transaction documentation.

The parameters for determining the final asset price have also changed. In the vast majority of M&A deals closed in 2022 and 2023, businesses were acquired at a fixed price. In 2024 and early 2025, the parties' drive to ensure a fair market valuation led to a rise in agreements featuring price adjustment mechanisms based on business performance at the time of closing.

Furthermore, parties are increasingly utilizing deferred payment terms, and there has been a market resurgence of earn-out provisions whereby a portion of the purchase price is paid only if the acquired business meets agreed-upon future performance targets. While such terms were virtually non-existent in 2022, their prevalence has increased manifold since the second half of 2023. Collectively, these changes suggest a gradual stabilization and increased predictability of business terms.

It is still too early to declare the transformation of the Russian M&A market complete; however, it is evident that the market is far from stagnant and possesses the capacity to adapt to the constantly shifting conditions of a crisis environment.

Source/Authors: Forbes Russia / Mikhail Filatov, Anton Panchenkov, ALUMNI Partners

Link to the original publication: https://www.forbes.ru/mneniya/538240-mozno-ne-spesit-kak-rynok-m-and-a-adaptiruetsa-k-peremenam-v-rossijskoj-ekonomike?