M&A・Valuation ・7 MINS READ
Why Eastern Europe is the most underpriced market for IT services acquisitions right now
CEE multiples have recovered to 10.5× EBITDA, but Ukrainian assets still trade at a 40–65% discount. For buyers who know how to structure the deal, that gap is the opportunity.
In this article
The recovery most buyers sat out
Ukraine: why the 40–65% discount exists, and why it isn't permanent
The EU holding premium: the single move that can double valuation
Five factors that explain 80% of valuation variance
2025–2026 outlook
Share:
Here's an unpopular opinion: not every Eastern European IT company is a good acquisition target. But the ones that are - are significantly underpriced.
The data tells a clear recovery story. CEE median EBITDA multiples crashed to 5.8× in Q1 2022 - the widest gap to Western Europe ever recorded - then recovered to 10.5× in 2024, actually surpassing the European average of 10.0× for the first time. Deal volume reached 70+ IT services transactions, a 35% jump from 2023.
But that headline number hides a bifurcation that smart buyers understand: Ukrainian companies with the right entity structure, client portfolio, and delivery model are still transacting at 3–4× EBIT. The same business, properly structured through an EU holding, can command 8–12×. That spread is the entire thesis.
In this article
The recovery most buyers sat out
Ukraine: why the 40–65% discount exists, and why it isn't permanent
The EU holding premium: the single move that can double valuation
Five factors that explain 80% of valuation variance
2025–2026 outlook
Share:
Here's an unpopular opinion: not every Eastern European IT company is a good acquisition target. But the ones that are - are significantly underpriced.
The data tells a clear recovery story. CEE median EBITDA multiples crashed to 5.8× in Q1 2022 - the widest gap to Western Europe ever recorded - then recovered to 10.5× in 2024, actually surpassing the European average of 10.0× for the first time. Deal volume reached 70+ IT services transactions, a 35% jump from 2023.
But that headline number hides a bifurcation that smart buyers understand: Ukrainian companies with the right entity structure, client portfolio, and delivery model are still transacting at 3–4× EBIT. The same business, properly structured through an EU holding, can command 8–12×. That spread is the entire thesis.
Finding • 1
10.5×
CEE median EBITDA multiple, 2024 - above European average
Finding • 2
3–4×
Ukrainian entity EBITDA multiple - 65% below CEE peers
Finding • 3
70+
CEE IT deals closed in 2024, up 35% year-on-year
Finding • 4
+100%
Valuation uplift from EU holding vs. pure Ukrainian entity
The recovery most buyers sat out
When Russia launched its full-scale invasion in February 2022, Eastern European IT valuations collapsed with startling speed. The median EBITDA multiple for CEE software development companies fell to 5.8× — 7.2 turns below the Western European median of 13×. Institutional buyers paused. Deal flow dried up. Ukraine's total M&A activity fell to just 54 transactions in 2022, down from 120 the year before.
By 2024, the CEE median had not just recovered, it overshot. At 10.5×, it now sits above the European average of 10.0×. The buyers who stayed active through the bottom entered at 5–7× and are now looking at exit paths at 10–12×.
CEE EBITDA multiples crashed to 5.8× in 2022, then recovered to 10.5× in 2024, surpassing the European average for the first time. Source: Capital Times Q4 2024, Aventis Advisors.
IMPORTANT
Only 2.2% of CEE IT services deals disclose EBITDA multiples. All median figures are drawn from small disclosed samples that skew toward larger, higher-quality transactions. The "median" is a median of deals that made it into the public record, not the full market.
Ukraine: why the 40–65% discount exists, and why it isn't permanent
Standard CEE multiples do not apply to Ukrainian companies with domestic legal entities. Buyers active in this market report entry multiples of 3–4× EBIT for pure Ukrainian entities, a 60–65% discount against the CEE median.
The discount is not emotional, it is structural, pricing four concrete risks: operational continuity (power outages, missile strikes affecting delivery), staff mobilization (martial law travel restrictions for male employees aged 18–60), NBU capital controls limiting profit repatriation, and the near-impossibility of obtaining W&I insurance for Ukrainian transactions.
"They want to buy a company that's already profitable. They need to know the number of people, what profit the company has, how many years it's been operating. And then they start considering that company for purchase."
Alexandra Patlazhan, M&A intermediary
The discount does not reflect operating resilience. Ukrainian IT companies have demonstrated extraordinary continuity: 84% of developers continued full-time work after the invasion. IT exports grew to $6.45 billion in 2024 - 37.4% of total Ukrainian service exports, still expanding. The gap between operational resilience and structural valuation is precisely where the opportunity lives.
The EU holding premium: the single move that can double valuation
A company with a pure Ukrainian entity faces specific acquisition barriers that restrict the buyer pool to regional or opportunistic acquirers. The same company with a Netherlands, Estonia, or Poland holding entity becomes a standard European acquisition, accessible to institutional PE funds, large strategics, international acquirers, and moves toward standard CEE multiples of 8–12×.
Structure
Establish EU holding
(Netherlands / Estonia / Poland)
Operations
Relocate 30–40% of staff
to EU jurisdictions
Result
Valuation moves from
3–4× to 8–12× EBITDA
54% of Ukrainian IT companies now maintain official offices or operations abroad, and this proportion is the primary driver of valuation recovery in the sector. Companies implementing the EU holding structure while relocating 30–40% of staff effectively de-risk themselves from a buyer's perspective, moving from the Ukrainian discount band to standard CEE multiples. The practical valuation uplift: 50–100%+.
Five factors that explain 80% of valuation variance
1. Revenue model: recurring vs. project-based
This is the single largest controllable variable. Pure T&M staff augmentation businesses trade at 3–5× EBITDA. Companies with 50–70% recurring managed services revenue command 7–9×. Above 70% recurring, multiples push to 9–12×.
"My main problem is that growth is happening only through existing clients. New clients, very few. Revenue right now is probably under a million. About 30 people, mostly outstaff. I sell the team rather than the scope."
Andrii Kruten, Founder at Deviark
2. EBITDA margin (normalized)
Margin is both a quality signal and a direct multiple driver. The normalization step is critical: most founders pay themselves below-market salaries and extract profit through dividends. Market compensation for a CEO running a 30–100 person EE IT company is typically $80,000–$150,000/year, adjusting for this alone can move a company from 20%+ margin (premium) to 12–15% (norm).
3. Client concentration
The 30% single-client threshold is a hard line for most institutional buyers. Above 50% single-client concentration, the business becomes accessible only to distressed or opportunistic buyers at deep discounts. The ideal profile: no single client exceeding 15% of revenue, diversified base of 15–30+ active accounts.
"Main client generates 12% of revenue on a $4M scale. Top-3 client portfolio is 30%. That's good, no dependency on one client. If they leave, it won't be the end. And clients have been with them an average of 2 years."
Artur Fedorenko, Founder & CEO of Wiseboard
4. Client quality and account density
Beyond concentration, buyers screen for relationship quality. An enterprise client ($10M+ revenue) paying $200–300K/year over 2+ years is a fundamentally different asset from a startup paying the same amount in year one. The former signals embedded relationships, high switching costs, and expansion potential.
5. Key person dependency
A business where the founder controls all client relationships and drives all sales is not an acquirable business, it is an employment contract with an office attached. Founder-dependent companies trade at a 0.5–0.6× EBITDA discount, and earnouts covering 2–3 years become contractually required.
Ready to evaluate an Eastern European IT acquisition target?
Wiseboard works with buyers across the deal cycle, from target screening and preliminary valuation to deal structuring and integration planning.
What 2025–2026 looks like for buyers and sellers
Several structural trends are converging to shape the near-term window. AI is compressing T&M demand, Aventis Advisors specifically flagged that AI coding tools are "reducing the labor content of software development engagements and compressing demand for traditional staff augmentation." The companies most exposed are those with high T&M exposure to US tech companies where AI adoption is fastest.
Consolidation is accelerating. PE now represents 37–45% of all deals (up from 25% in 2015), with active buy-and-build strategies through platforms like Ciklum (Recognize Partners), Software Mind (Enterprise Investors), and Avenga/Qinshift (KKCG). The next 18–24 months represent a window in which mid-market sellers ($1M–$5M ARR) can achieve meaningful multiples as platform add-ons.
The Ukrainian restructuring premium is closing. As more Ukrainian companies establish EU holding structures and relocate operations, the extreme discount on Ukrainian assets will narrow. Buyers who move now, while the discount still exists, are getting assets that will be valued at standard CEE multiples in 18–24 months.
[Bonus] Integration Readiness Playbook
Assess where your business stands across nine critical dimensions, from strategy and financials to operations, people, and culture.
It's designed to give you clarity on:• Your current readiness level and where integration will be most painful• Specific gaps that could derail negotiations or lower your valuation• Actionable priorities to strengthen your position before engaging with buyers• Realistic timelines for getting deal-ready based on your score
[Bonus] Integration Readiness Playbook
Assess where your business stands across nine critical dimensions, from strategy and financials to operations, people, and culture.
It's designed to give you clarity on:• Your current readiness level and where integration will be most painful• Specific gaps that could derail negotiations or lower your valuation• Actionable priorities to strengthen your position before engaging with buyers• Realistic timelines for getting deal-ready based on your score
KEY TAKEWAY
Companies with good multiples in 2027–28 are being built right now. The 2025–2026 window is for doing the work, entity setup, revenue model shift, client diversification, management depth. The exit window follows. If you need help spotting where your company is leaking value, feel free to reach out. Wiseboard advisors have helped 60+ IT companies break through their growth bottlenecks.
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