Portugal - resilience and cross-over opportunities

Portugal - resilience and cross-over opportunities

The Portuguese M&A market has shown resilience, but with a contraction in volume and value over 2024-2025.

According to reports compiled by the trade press, the total number of deals announced and closed in 2024 was around €9 to €12.6 billion, depending on the scope and period taken into account, representing a significant decline compared to 2023 (in terms of both number and capital raised).

The beginning of 2025 confirmed the decline compared to the beginning of 2024 (lower transaction volume and high proportion of transactions not declared by value).

The tech/startup sectors remain dynamic in terms of strategic activity (spin-outs, acquisitions, localized exits), but valuations are more cautious.

Industry (energy, infrastructure), healthcare and private equity continue to attract large-scale transactions.

Number of operations for 2024: between 461 and 602 depending on the window selected (Jan-Oct vs. full year / methodology).

At the start of 2025, the first few months show a marked downturn (68 deals = €315m Jan-Feb), illustrating a slowdown in value even though the number of transactions remains significant.

More detailed sector analysis

Tech (software, deep tech, space, fintech)

We are seeing consolidation by European/foreign players and strategic operations (acqui-hire, solutions integration).

Cross-border transactions are common - European buyers are looking for tech capabilities and talent.

The notable example of OpenCosmos's acquisition of Portuguese startup Connected is a demonstration of a rapid exit trajectory for promising Portuguese deep-tech companies.

Negotiations focus more on earn-outs and retention clauses (to align founders/post-close talent); also noteworthy is an increase in due diligence on intellectual property and regulatory compliance (data, cybersecurity).

Valuations are more conservative than in 2021-22, but targets with recurring revenues or enterprise contracts retain attractive multiples.

Industry (energy, infrastructure, manufacturing)

A trend is emerging: medium- to large-scale operations, often carried out by infra-PE funds (e.g. the stake in Brisa, sales of EDP assets in other cases).

Renewable energies (hydrogen, electrolysis) are attracting industrial investment. Major international groups choose Portugal for H2 projects.

In negotiation, environmental/ESG due diligence has become central; acquisition structures including co-investors and clubdeals are often present to share the high capex risks.

Consulting (legal / strategy / boutique M&A)

The M&A consulting market is competitive; local firms and international offices are strengthening their presence by opening or integrating teams in Portugal.

Advisors play a crucial role in structuring cross-border transactions and preparing sellers for competitive processes.

Startups / Venture-backed

By 2025, there will be a significant pool of scaleups (AI, SaaS, space, deeptech). VC financing continues, but exit windows have tightened (fewer local IPOs, more exits by acquisition via European/US groups). A few rapid exits have emerged.

Preferential liquidation clauses, ratchets, anti-dilution protections and earn-out/retention conditions are being discussed more firmly. Late-stage rounds check commercial soundness (ARR, churn) before opening the doors to M&A.

Factors shaping the negotiations (2023-2025)

Macro & interest rates: rising interest rates and macro uncertainties have squeezed multiples, lengthened closing times and pushed up financing terms and conditions.

Private equity & infra funds: we note an accumulation of funds seeking to deploy; also a structuring of club deals and co-investments for large transactions.

Regulations & ESG: SFDR, CSRD/CSDDD and reporting obligations have an impact on transaction documentation and due diligence, especially for PE buyers (integration of ESG-DD).

European financing / recovery funds: EU funds and national policies continue to fuel strategic projects (H2, digital), influencing interest in industrial/energy assets.

Negotiation dynamics and clauses that have become customary

-Extension of closing periods and financing conditions precedent.

-Frequent use of earn-outs and retention clauses/performance bonuses in tech/startups.

-Indemnities & escrow with amounts and durations negotiated upwards to cover post-close overdraft risks.

-Post-close covenants (non-compete, non-solicitation), as well as data/security clauses for tech targets.

-Price adjustments (net working capital, debt/cash adjustments) are becoming standardized, but are often contested depending on the complexity of the sector.

Transactions and noteworthy events (selection 2023-2025)

Open Cosmos acquires Connected (Portuguese space-IoT startup) - an example of a strategic tech exit.

Sales/participations in healthcare and infrastructure - Luz Saude-related divestments/participations involving institutional players/funds. Amounts and profiles show the appetite of sub-SMEs in the healthcare sector.

Portuguese law firms are very active on 2024, illustrating the concentration of advice on very large deals.

Risks & challenges for traders

-Macro volatility and the risk of market conditions deteriorating before closing.

-The limited disclosure of values, largely due to deals in Portugal which do not publish their value, complicates benchmarking.

ESG regulatory constraints (CSRD/CSDDD), which require more in-depth due diligence to identify potential reputational liabilities.

Opportunities (for buyers, sellers and funds)

Strategic buyers: technology acquisition opportunities (SaaS, AI, space) at revised but reasonable multiples; possibility of acceleration via cross-border integrations.

-Vendors / founders: it's imperative to prepare a solid business case (SaaS / ARR metrics, churn, pipeline) and accept earn-out/retention structures to maximize the price.

-Private equity / infra: opportunities in renewable energy, healthcare and Portuguese infrastructure supported by European funds; creation of club deals to spread capex.

Recommendations and practices (checklist for 2025 negotiations)

For buyers:

1. Set up firm financing before the term sheet (to reduce the risk of financing condition).
2. Strengthen ESG-DD and cyber-DD (especially tech/industry).
3. Use calibrated earn-outs (clear KPIs) to bridge valuation gaps.

For sellers / founders:

1. Structuring the data-room to accelerate due diligence (recurring finance, IP, key contracts).
2. Prepare a retention package for key-talent and earn-out scenarios.
3. Consider partial sales / minority buyouts if the market is unfavorable.

For funds / PE:

1. Prefer club deals/co-investments for infra/industry transactions.
2. Integrate ESG & compliance scenarios right from the investment phase.
3. Value-creation plan (operational improvements) to justify leverage in the most expensive deals.

Short-term schedule (remainder of 2025)

A selective market is likely to continue: the number of transactions remains stable but with a lower average value, with occasional peaks for large strategic disposals or infrastructure/energy opportunities.

VC exits will depend on the renewed confidence of strategic buyers and the availability of financing.

Sources: Iberian Laywer, Chambers ans Partners, Open Cosmos, Reuters

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