Please give us an overview of the current legal market in the UK and how any recent developments have impacted your practice?
Our London M&A practice is a combination of UK and cross-border transactions, so our deal flow remains robust both in the corporate and private equity sectors. Brexit has had some impact on transaction flow given the uncertainty that remains around what sort of deal the UK will negotiate with the EU.
What significant trends exist in the US markets presently? Are you seeing these just domestically or internationally as well?
We are seeing an increase in life sciences and the tech sector activity, as well as an in-crease in activity by private equity debt funds providing financing for
M&A transactions. We have also seen an uptick in distressed M&A transactions. These trends are prevalent both domestically and internationally.
In addition, and notwithstanding the uncertainty surrounding Brexit, English law remains the favoured governing law for cross-border deals and we see no reason why this should be impacted by Brexit.
What are the three biggest challenges to practicing in M&A at the UK at the moment?
Financing of transactions: the availability of traditional lending by banking institutions and the ability of those institutions to write the big cheque, although the replacement of conventional financing by debt private equity funds has alleviated this to a certain extent.
Brexit: uncertainty in terms of what deal the UK will achieve and the possible implications of both the exit itself and the deal create pressure in the market.
Fee structures: more and more transactions are being structured as capped, fixed or alter-native fee deals, and with the inherent fluidity of an M&A deal this is a challenge which will only continue for law firms and will likely lead to a project fee approach as opposed to the traditional hourly billing arrangements.
How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?
M&A, both corporate and private equity, is a key driver of the firm and provides work to a number of other departments, whether that is tax, antitrust or employment. M&A is the primary ‘exporter’ of work within the firm and the network. Collaboration is easy: the firm is managed on business lines enabling a more uniform approach between international offices on cross-border transactions.
What advice would you give to the next generation of M&A lawyers?
Gain an understanding of your clients’ business and always look to improve your depth of knowledge in that area as it will drive your ability to provide flexible, commercial solutions to your clients’ issues on a transaction. If you understand the commerciality of the client’s operations and their objectives on a particular M&A deal, you will be better placed to spot the key issues as, and before, they arise.
What are your predictions for M&A in the UK over the next five years?
Tech will continue to increase in activity as companies of all sizes get to grips with its im-pact on business. We expect life sciences to be a key area and there will be a greater focus on energy, both in the more traditional oil and gas sector and an increase in the sustainable energy sector. We also expect that Brexit and its impact will lead to an initial dip in activity but that that dip will be followed by an increase once the landscape post-Brexit becomes less uncertain.