M&A in Finland (2012)

Economic situation in Finland

Finland joined the European Union (EU) in 1995. Finland’s debt remains below the 60% benchmark set by the European Union’s (EU’s) growth and stability pact. It is declining from 44% of the GDP in 2008 to 38% in May 2011. Despite the debt level, exports are still not returned to the level before the crisis. Due to the decline in international trade the total value declined from $129bn in 2008 to $89bn in 2009 with a small recovery to $90bn in 2010.

Almost no corruption exists in Finland. The country is ranked 4th out of 180 on the Transparency International’s Corruption Perceptions Index. This makes Finland an attractive country for foreign (M&A) investments.

Business in Finland

Three-quarters of the land area of Finland are covered with forest and around 20% of the export income is derived from the forest industry, particularly from high-tech paper products. Sustainable forest management is a key issue for the government.

Much of the EU’s trade with Russia occurs through Finland, which gives the country a significant advantage in terms of geographic location, as it can be used as a trading hub by and for both the Baltic States and the Nordic countries.

Exported products of Finland can be found in pulp, paper, machinery and equipment, chemicals, metals, timber. Finland’s three top export partners are Russia, Sweden, and Germany. Imports are textile yarn and fabrics, grains, foodstuffs, petroleum and petroleum products, chemicals, transport equipment, iron and steel, machinery. In terms of imports, Russia had an import share of 16.2% in 2009, followed by Germany (15.7%), Sweden (14.6%), and the Netherlands (6.9%).

M&A Opportunity sectors

Information and communications technology (ICT), forest-based industries, and biotechnology have been identified as important sectors for investment in Finland. High technology products accounted for around 14% of the country’s total exports in 2009. Several of the world’s top Internet security companies are based in Finland. Around 10% of European companies in the biotechnology sector are from Finland. Finnish biotech firms constitute almost 7% of all biotechnology companies in the EU.

M&A Investing in Finland

The legal system of Finland is heavily influenced by Sweden, Finland welcomes foreign investment and provides an attractive environment for foreign investors, owing to the country’s macroeconomic stability, its well-educated workforce, its openness to technology, and its cheap electricity and telecommunications. Taxes on individuals are relatively high. Corporate entities are subject to a tax of 26%. The general VAT rate is currently at 23%. Finland’s labor system is overregulated. Much of the European Union’s (EU’s) trade with Russia happens via Finland. With regards to acquisitions of major enterprises and defense companies, the government has a right to reject such deals.

Research & Development

Although government expenditure on research and development is high, private sector investment is not broad-based. Finland’s expenditure in R&D is high with 2,7% of its GPD. Investments in the private sector are not broad based, a significant share is invested by the Nokia Corporation (32,3% of total spending in Finland)

Technological landscape

According to the World Economic Forum, Finland ranks seventh in the world in terms of the Global Competitiveness Index for 2010–11. Finland is unable to translate its research capabilities into patents. Although the number of patents is rising (with 1,232 patents registered in 2010), it is still far behind other EU nations.

The annual number of doctoral degrees doubled since 1990´s. A highly qualified workforce is beneficial for Finland concerning the investments in high-tech industries. The aging population is a challenge for the government to keep the pension system on its current level.

Finland is an interesting country for M&A. In this article we tried to give a impression about M&A in Finland. If you have a question, suggestion or opinion leave a reaction on this article.