"Cyprus broadly mirrored global M&A trends but remained heavily influenced by local market characteristics. Deal activity was largely driven by domestic players rather than international entrants, reflecting the market’s relationship-based nature and relatively limited depth," Pavlos Economou, Director, EPENDISIS.COM suggests.
Recently sharing his view on how 2025 was shaped by the mergers and acquisitions trend and how he anticipates it will impact 2026 with GOLD magazine, the expert also notes, "M&A in Cyprus makes the most sense in restructuring or succession-driven sell-side situations, particularly where founders lack clear succession plans. However, a persistent challenge remains the disconnect between seller expectations and achievable valuations, underlining the need for greater market education."
Among other things, he also comments that, "2026 is likely to mark a more active phase for Cyprus, driven by regional consolidation rather than purely domestic transactions" while also noting that, "In a small market like Cyprus, M&A remains one of the most effective paths to scale and hence improve effectiveness and competitiveness in a more demanding international market environment.
2025 was defined by geopolitical conflict, shifting trade policy and market volatility. How did these forces affect deal flow and valuations on the global stage?
2025 unfolded against a backdrop of geopolitical tension, shifting trade policies and, indeed, heightened market volatility, resulting in a more selective global M&A environment. While uncertainty weighed on cross-border activity and delayed some deal timelines, strategic transactions continued, particularly in sectors with strong structural growth. AI innovation remained the dominant driver of capital deployment, with major US technology companies investing heavily in artificial intelligence, data centres and digital infrastructure. These themes pushed the valuations of tech companies at the top end of the market, even when pricing pressure emerged in more cyclical or geopolitically exposed sectors. Policy shifts under the Trump administration, including renewed tariff rhetoric and a move away from renewables toward fossil fuels, added complexity to dealmaking and increased execution risk. Despite this, US equity markets continued to rally, reflecting strong risk appetite, while elevated gold and commodity prices signalled underlying investor caution. Overall, valuations stayed resilient for high-quality assets, while risk-adjusted pricing became more prominent elsewhere.
Did Cyprus largely track global M&A trends in 2025 or did local conditions, such as regulation and market depth, drive a different outcome?
Cyprus broadly mirrored global M&A trends but remained heavily influenced by local market characteristics. Deal activity was largely driven by domestic players rather than international entrants, reflecting the market’s relationship-based nature and relatively limited depth. The banking and insurance sectors remained central to transaction activity, with well-capitalised institutions deploying excess liquidity to expand offerings and consolidate market share. Regulatory stability and conservative financing practices shaped deal structures, favouring lower leverage and incremental acquisitions over transformational transactions. As a result, while strategic intent aligned with global trends, execution in Cyprus remained cautious, domestically focused and capital-discipline driven. Apart from banking and insurance, there was limited activity in terms of consolidation of fragmented or inefficient sectors in Cyprus.
Which sectors and/or segments in Cyprus emerged as the most active or attractive for transactions and which, if any, look most promising going forward?
Deal activity in Cyprus remained concentrated on banking, insurance, hotels and real estate. Financial services continued to benefit from consolidation dynamics and strong balance sheets, while hospitality assets attracted sustained interest due to a solid operating performance and Cyprus’ resilient tourism profile. Real estate stood out through an increase in sizeable sale-and-leaseback transactions, allowing corporates to release capital while maintaining operational control. In the local IT sector, the Semrush transaction demonstrated that Cyprus-linked businesses can still attract global strategic interest. At the same time, the thriving international IT sector in Cyprus continues to attract investment in startups and other innovation set-ups. Looking ahead, financial services, hospitality and income-generating real estate remain the most attractive sectors, particularly where assets offer stability and professional management.
In today’s environment, when does M&A make strategic sense for Cypriot businesses and what benefits does it offer?
M&A in Cyprus makes the most sense in restructuring or succession-driven sell-side situations, particularly where founders lack clear succession plans. However, a persistent challenge remains the disconnect between seller expectations and achievable valuations, underlining the need for greater market education. On the buy side, acquisitions are most compelling for well-capitalised companies seeking market share, vertical integration or operational synergies. In a small market like Cyprus, M&A remains one of the most effective paths to scale and hence improve effectiveness and competitiveness in a more demanding international market environment. Foreign market entry via acquisition remains rare, with most transactions driven by existing local or regional players.
Do you expect 2026 to resemble the dynamics of 2025 or is the market entering a different phase? If so, what will be the key drivers of that shift?
2026 is likely to mark a more active phase for Cyprus, driven by regional consolidation rather than purely domestic transactions. Profitable companies from abroad are increasingly using Cyprus and Greece as strategic platforms for regional expansion. Significant dry powder held by private equity funds, alongside growing participation from global family offices, is expected to support deal activity. A potential global market correction could further improve valuation dynamics and unlock opportunities. While macro-uncertainty will persist, capital availability and regional strategy suggest a more opportunity-driven M&A environment in 2026.
This interview first appeared in the January edition of GOLD magazine. Click here to view it.
