The Portuguese M&A market continues to demonstrate remarkable resilience and dynamism, standing out in a global environment where deal activity in many jurisdictions remains subdued. At our recent Dealmakers Dialogues in Lisbon, Nertila Asani, Lourenço Mayer, João Miguel Pessanha, Francisco Proença de Carvalho, and João Sousa Leal discussed the opportunities driving Portugal’s M&A growth and the structural hurdles that risk slowing momentum. For dealmakers eyeing the region, understanding these dynamics is key to capitalizing on what remains a “hot” market.

A positive pace

Since recovering strongly in 2024, Portugal’s M&A market has maintained a steady pace, avoiding the steep declines seen in other European countries. The outlook for the remainder of 2025 is broadly positive, contingent on the absence of major global shocks.

Several factors are fueling this activity:

• Private equity exits from funds raised between 2018 and 2022
• Government-backed fund deployment deadlines
• Corporate expansion, as Portuguese players seek new capabilities and revenue streams and international growth

Cross-border activity also remains a defining feature. Spanish investors, in particular, continue to see Portugal as a strategic growth market, with the consumer, industrials, and food & beverage sectors attracting significant interest. Recent acquisitions such as Padaria Portuguesa by Grupo Rodilla (food & beverage) illustrate this trend.

Meanwhile, large Portuguese corporates are also active abroad. SONAE recently completed a €1 billion investment cycle across the Nordics, Spain, and France. Similarly, groups such as Semapa, CTT, and Brisa are pursuing bold cross-border moves, underscoring the internationalization of Portugal’s corporate landscape.

Market drivers and capital pressure

The market is widely described as “hot,” with financial investors under pressure to deploy capital. This is accelerating deal activity, particularly in mid-market transactions and “buy-and-build” strategies favored by private equity.

Venture capital has also gained momentum, supported by new incentives and initiatives from Banco Português de Fomento, with technology and innovation hubs in Lisbon and Porto increasingly attracting early-stage investment.

Interestingly, official statistics are thought to capture only about 20% of total deal activity. Anecdotal evidence suggests that the period from October 2024 to September 2025 has already been considerably more active than the previous year, pointing to an underreported but thriving market.

Key challenges constraining growth

Despite strong fundamentals, several systemic challenges continue to hinder Portugal’s ability to fully capitalize on investor appetite.

1. Valuation Gap: The single most pressing deal-breaker is the persistent misalignment on valuations between buyers and sellers. Sellers, many of whom are often family-owned businesses, base expectations on pre-crisis multiples, while buyers take a more conservative stance given higher interest rates and global uncertainty. Emotional attachment further inflates perceived value in family firms, leading to extended negotiations and failed deals.
2. Deal Execution Timelines: Transactions now routinely take eight months or more, compared to five or six previously. Some stretch to 10-12 months, significantly raising the risk of collapse. Much of this delay stems from companies being unprepared for the sale process, with disorganized data rooms and poor internal documentation.
3. Financing Constraints: The Portuguese market remains over-reliant on commercial banks for deal financing. Compared with other European countries, Portugal is “miles away” in terms of alternative lending structures, which limits flexibility and competition in capital deployment.
4. Regulatory & Tax Environment: Bureaucracy and an unstable tax regime are frequently cited by investors as major deterrents. Without greater consistency and efficiency in public administration, Portugal risks losing competitiveness to neighbors like Spain and Italy.

Strategies for a stronger ecosystem

Even with these issues, several strategies could unlock further growth for Portuguese M&A:

• Regulatory Reform: Simplifying bureaucracy and stabilizing the tax regime would significantly boost investor confidence.
• Alternative Financing: Developing non-bank financing channels is critical to making the market more competitive and scalable.
• Professionalization of Family Businesses: Preparing earlier for potential transactions, investing in governance, and engaging advisors can shorten timelines and improve outcomes.
• Cultural Shift: Portuguese corporates and private equity players are encouraged to show greater ambition, embracing larger and cross-border deals to strengthen Portugal’s position in the European M&A landscape.
• Advisory Role: Trusted advisors must continue to play a key role in educating shareholders on realistic valuations and deal processes, gradually overcoming cultural distrust and demonstrating tangible value.

Opportunities with caution

Portugal’s M&A market offers a compelling mix of resilience, international interest, and deal flow. However, it faces a delicate balancing act: bridging the valuation gap, professionalizing its deal ecosystem, and modernizing its financing and regulatory frameworks.

If these challenges are addressed, Portugal is well-positioned to continue attracting international capital, particularly as investors look for growth markets with relative stability. For M&A professionals, the opportunities are abundant, but execution discipline, realistic pricing, and cultural sensitivity will remain critical to success.

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