After a few years of development at breakneck speed, Romania has plunged into recession, leaving the country’s private equity firms sitting on the sidelines waiting for improved conditions. Vicky Meek reports

“We’ve had a rollercoaster ride in Romania over recent months,” says Wilson Balachandra, financial advisory services partner at KPMG’s Bucharest office. “We were busier than we could ever have imagined in the period up until last summer. But then everything was put on hold. Romania slid very quickly into the crisis. There was a flurry of deals in the early part of the year as vendors decided they wanted to sell before the crisis developed any further and then we saw another slowdown.”

The same could be said of many other Central and Eastern European countries, but Romania has had a particularly tough time of it since the financial crisis started to bite last autumn. “M&A has been severely impacted by the downturn in Romania,” says Bryan Jardine, Bucharest managing partner for Wolf Theiss. “It’s down around 90% from the peak and the country has weathered the storm worse than the more mature markets of the Czech Republic, Hungary and Poland.”

Over the last few years, Romania has been one of the region’s fastest growing economies as the country geared up to join the European Union and in the years immediately following accession. But from registering average GDP growth rates of just under 7% a year from 2003 to 2008, the country saw a steep drop from 9.1% in the third quarter of 2008 to 2.9% in the last quarter. The forecast for 2009 is pretty bleak at -4.1%, according to International Monetary Fund estimates...

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