Mergers and acquisitions to become more attractive through Action Plan, Finance Minister says

Minister of Finance Makis Keravnos has expressed the position that through the proper implementation of a specific Action Plan aiming at strengthening and encouraging mergers and acquisitions, these will become more attractive for businesses in Cyprus. 

The Minister was addressing the informational event of the Enterprise Europe Network Cyprus titled “Mergers and Acquisitions of Small and Medium Enterprises (SMEs) in Cyprus”, organised in Nicosia by the Cyprus Chamber of Commerce and Industry, in collaboration with Hellenic Bank on 28 May.

Citing statistical data, Keravnos said that small and medium-sized enterprises constitute approximately 99% of all enterprises both in Cyprus and in the EU, with very small enterprises constituting 95% of enterprises in Cyprus. 

He noted that small and medium-sized enterprises essentially constitute the main productive pillar of the Cypriot economy, contributing significantly to GDP and employment adding that the percentage of employees in small and medium-sized enterprises reaches 75% of all employees.

The Minister pointed out that mergers and acquisitions in Cyprus are at very low levels, mainly due to the type of businesses, namely family businesses in traditional sectors, where there is no culture of mergers. 

"Taking into account this fact, in combination with the advantages that arise from mergers and acquisitions, the government has proceeded with a specific Action Plan, with the main objective of strengthening and encouraging mergers and acquisitions," the Minister said.

He recalled that the Action Plan, which was approved by the Council of Ministers in August 2023, has a three-year implementation period 2024-2027 and focuses on three pillars. The first pillar, Keravnos said, concerns the creation of a comprehensive framework for the support and culture change regarding the promotion of mergers and acquisitions. The second pillar is the modernization of the legislative framework and the improvement and simplification of the procedures related to the legislative framework in relation to mergers and acquisitions. The third pillar, he said, concerns facilitating access to financing for small and medium-sized enterprises.

The Minister stated that in this context, the intention is also to consider providing specific incentives to investors who will finance a specific acquisition or merger.

To this end, Keravnos added, the government has proceeded with the establishment of an Equity Fund which will invest mainly in start-ups and innovative Cypriot companies, with a state contribution of €30 million, which will be financed mainly by the Cyprus Recovery And Resilience Plan. The management of the Fund has been entrusted to the European Investment Bank.

The Minister said that the government is promoting the establishment of a National Enterprise Development Agency with the aim of improving access to financing for small and medium-sized enterprises and start-ups, which will receive state funding for its first 5 years of operation, amounting to €107 million. 

Within the framework of the tax reform, he added, some of the proposals focus on the support and development of Cypriot businesses, as well as on the provision of targeted tax relief that will help all economic activities horizontally. 

"The government aspires that through the proper implementation of the Action Plan, mergers and acquisitions will become more attractive for our businesses," he concluded.

(Source: CNA)