Mergers and acquisitions (M&A) processes in Bosnia and Herzegovina are becoming increasingly common, especially in the energy, IT, and financial services sectors. Although the market is showing growth, investors still face a range of challenges, from regulatory obstacles to lengthy administrative procedures.
We are publishing in full the article released by the business magazine Biznisinfo – the leading business portal in BiH, which interviewed representatives of IA Law Firm.
On this topic, we spoke with Adi Ibrahimović, the leading partner at IA Law Firm – Law Firm “Ibrahimović & Co,” which was recognized twice in February this year as the best law firm in the field of M&A in BiH by the prestigious legal associations GlobalLawExperts and Corporate INTL from England.
“In the last three years, there has been a significant increase in investor interest in projects in Bosnia and Herzegovina, particularly in the renewable energy and IT industries. Foreign companies are actively seeking opportunities to acquire domestic firms to strengthen their presence in the region. Projects involving solar and wind farms are particularly attractive, while in the IT sector, we are witnessing increasingly frequent acquisitions of domestic software companies by global tech giants,” emphasizes Ibrahimović.
Adi Ibrahimović, Leading Partner at IA Law Firm – Law Firm “Ibrahimović & Co”
However, as he adds, executing such transactions is not simple. “Legal uncertainty and complex regulatory frameworks remain among the main obstacles for foreign investors. Our legal system is not fully harmonized, and the approval processes by regulatory bodies often take longer than they do in more developed markets.”
One of the key steps in the M&A process is an in-depth analysis of a company’s operations, or due diligence, which can be challenging in BiH. While foreign investors are generally accustomed to these processes being conducted electronically and without much difficulty in obtaining documentation, the situation in BiH is somewhat more complicated. “Land registries and public records are not fully digitized, which can make verifying property ownership difficult. Additionally, there are often errors in the old and new measurements of property, encumbrances that are not recorded in the land registers can be found in the field, and digital verification of assets is not sufficient. Interestingly, there is no Promissory Notes Register in BiH, so tracking company liabilities is not possible. On the other hand, the pledge register is not public and is not regularly updated, making it hard to give a reliable assessment of a company’s condition. Furthermore, tax aspects vary from entity to entity and district to district, which requires careful planning to avoid unforeseen costs and legal risks,” explains our interviewee.
When it comes to the sectors currently most attractive to investors, the energy sector leads due to the growing interest in renewable energy sources and regulatory incentives from the European Union. The IT sector attracts attention due to competitive business costs and a highly educated workforce. The banking sector is also undergoing consolidation, with mergers and acquisitions occurring to optimize costs and strengthen market position.
Despite the above, Bosnia and Herzegovina is making limited progress in strengthening its investment climate. “It is urgently necessary to adopt legislation that allows for the mutual recognition of permits and certificates between entities and ensure that e-registration of companies and business registers across the country are interconnected and fully operational, including e-signatures/e-seals. Additionally, the tax treatment of acquisitions requires more attention, as different jurisdictions apply different policies,” emphasizes Ibrahimović.
Despite the challenges, further growth in M&A activities is expected in BiH, particularly in the renewable energy and IT industries. “Investors are aware of the potential that BiH offers, but stabilizing the regulatory framework and more efficient administrative procedures are key to the long-term growth of this market. If the reform processes continue, BiH could become a significant destination for investors in Southeast Europe,” concludes the leading partner at IA Law Firm.
You can find the text at: Izazovi i prilike M&A transakcija u Bosni i Hercegovini – Biznis Info
For more on M&A, search for: Mergers and Acquisitions | IA Lawfirm
