BVI firms have weathered recent storms to see an increase in tech M&A

Please give us an overview of the current legal market in the BVI and how any recent developments have impacted your practice?

The BVI suffered severe damage in Hurricanes Irma and Maria in September 2017. In the aftermath of the storms, the financial services community formed an alliance and worked together to ensure the safety of personnel and business continuity. The Register of Companies was back online in a matter of days and the Commercial Court relocated and resumed operations within weeks. As a result of this well-coordinated response, the jurisdiction rapidly returned to normal operations and both the corporate and dispute resolution sectors have remained active over the past year.

The Limited Partnership Act 2017 (LPA) came into force in the first quarter of 2018. The LPA has modernised the limited partnership legal regime and it is anticipated that limited partnerships will be increasingly used as a vehicle of choice in the BVI for private equity fund formation.

The BVI has recently become a jurisdiction of choice for ICOs of cryptocurrencies, tokens and other blockchain-based assets.

What significant trends exist in the M&A market presently?

BVI companies have been involved in a number of M&A transactions relating to FinTech and healthcare, and there has been an increase in M&A activity in the oil and gas and mining sectors. Private equity M&A has been focused on the technology and fiduciary sectors in particular. Minority equity acquisitions have become more prevalent as investors seek to retain existing management and participate in increased returns generated by private companies.

The BVI remains a preferred jurisdiction for special purpose acquisition companies (SPACs), which are newly formed companies that raise capital through an IPO for the purposes of acquiring or merging with one or more existing operating businesses. In 2017, new BVI SPACs raised gross proceeds of approximately $2.5bn.

What are the three biggest challenges to practising M&A in the BVI at the moment?

  • The uncertainties surrounding the effects of Brexit;
  • The relative strength of the US dollar and the negative impact this has had on emerging markets; and
  • A potential trade war between the US and China.

What advice would you give to the next generation of M&A lawyers?

M&A lawyers should strive to obtain a clear understanding of their client’s business with a view to delivering commercially driven legal advice. Offshore corporate lawyers benefit from a multi-disciplinary practice with a broad understanding of both M&A and banking and finance. Successful offshore lawyers tend to be generalists with a wide array of experience in many practice areas. It is also helpful to develop knowledge and expertise in specific industries which tend to feature in M&A transactions (e.g. technology, healthcare, etc.) as well as recent developments generally in the private equity industry.

What are your predictions for M&A in the BVI over the next five years?

We predict that we will continue to see an increase in volume in technology (including FinTech) M&A and that there will be a steady increase of M&A activity in the mining sector. We also anticipate the divestiture of non-core assets and business units of global industries (including IT) and the continued employment of BVI holding company structures for Chinese clients.

Competition is high in Bulgaria’s accelerating M&A market

Please give us an overview of the current legal market in Bulgaria and how any recent developments have impacted your practice?

The high level of competition in the Bulgarian market, which includes both well-established local players and international law firms, has brought down the price for legal services and underscored the need for effectiveness as a driving ethos of the modern Bulgarian law firm. A high quality of work is expected by clients. The rise of technology has created the conditions, and increased demand, for the formation of multi-disciplinary advisory teams to work on all aspects of a transaction. This trend has provided a distinct advantage for Deloitte Legal, due to our extensive experience in forming teams across disciplines and jurisdictions. The high level of synergy with advisory groups within the Deloitte brand has helped us ensure quality and efficiency.


What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

The Bulgarian M&A market continues to accelerate, with 2017 marking a threefold increase in size on an annual basis. The real estate sector continues to be the most attractive field for M&A transactions with an increasing focus on office space. The global trends of technological convergence, or the acquisition of technology companies by non-tech buyers, and healthcare M&A are yet to make an impact on the market.


What are the three biggest challenges to practising M&A in Bulgaria at the moment?

The rise of technology has enabled actors in the M&A market to pursue deals more aggressively and conclude their business in shorter time frames. This has pushed law firms to deliver results at a much faster rate, which presents them with the challenge of increasing their efficiency, while retaining the level of quality of their services. Technology has also improved communication and, thus, made multi-disciplinary cooperation a necessity. Traditional law firms’ lack of sufficient experience in such endeavours can pose an obstacle to the delivery of a cohesive service. Finally, the increasing prominence of cross-border operations demands a high level of proficiency in foreign languages, as well as extensive knowledge of global M&A trends.


How does M&A fit into your firm as a whole? Is it easy to collaborate with other teams?

Mergers and acquisitions remain a core focus of Deloitte at a global level. Our organisation is structured in a way that enables us to swiftly establish channels of communication between professionals of various disciplines and jurisdictions. This allows us to provide one-stop-shop services to our clients without sacrificing quality and efficiency. Depending on the client’s needs we offer support in financial analysis, tax, risk advisory, and so on. As a result, our team has established a prominent presence in the M&A market. In the past year, we have worked on some of the most significant transactions in Bulgaria.


What advice would you give to the next generation of M&A lawyers?

The legal profession has changed dramatically in the past decade. Advances in automation are gradually rendering some traditional legal skills, such as research and contract drafting, obsolete. A key strength of the next generation M&A lawyer will be the ability to communicate with clients, to manage their expectations and know their business, their strategy and
risk-taking proclivities. Next generation professionals must also be adaptive. Traditional forms of competition between law firms are gradually changing,
as market conditions and client expectations push firms to form
multi-disciplinary teams and collaborate on an unprecedented level.


What are your predictions for M&A in Bulgaria over the next five years?

The outlook for the market is very positive. The accelerating growth of the Bulgarian economy has provided local players with the funds and the incentives to expand their operations. At the same time, the prospects for profitability will continue to attract foreign investors. The main threat to the market remains the local political instability and the possibility of another global economic crisis.

Making deals in the Caymans

Cayman Islands aerial view

Please give us an overview of the current legal market in the Cayman Islands and how any recent developments have impacted your practice?

2018 has seen the continuation of an unprecedented period of deal making across all sectors. The global conditions that drove M&A activity in 2017 remain at the time of writing – buyers continue to seek access to new markets and take advantage of continued low interest rates, while private equity funds actively seek to deploy capital.

The Companies Law, Limited Liability Companies Law and Exempted Limited Partnership Law have been revised in 2018. These revisions represent a consolidation with amendments made since the immediately preceding revisions, changes connected with the Cayman Islands’ beneficial ownership regime and a general updating of references to other legislation, rather than material legal developments in the M&A space.

Legislative reforms are entering final stages for the creation of a new restructuring regime in the Cayman Islands. The anticipated effect of the new regime is the proposed introduction of a court supervised restructuring moratorium outside of the winding-up process. Current timing estimates for the enactment are the end of 2018/early 2019. It is anticipated that once those changes are enacted, there will be an uptick in the number of restructurings in the Cayman Islands.

 

What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

The technology, media and telecommunications, real estate, and healthcare sectors continue to dominate M&A transaction flow. Locally we are seeing increased buyer interest and consolidation in the fiduciary and fund services sector. Buyers are also keeping a watchful eye on opportunities in the fintech industry as the Cayman Islands develop as a global fintech hub.

 

What are the three biggest challenges to practising M&A in the Cayman Islands at the moment?

Multiple suitors for assets as private equity funds look to deploy capital; the uncertainty of the effects of Brexit for European transactions with a Cayman Islands’ component; and current macroeconomic and geopolitical factors influencing Cayman Islands transactions are the three biggest challenges to M&A activity at the moment.

 

How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?

Appleby are experts in offshore corporate, finance, funds, restructuring and dispute resolution. The M&A team plays a central role in Appleby’s wider corporate and finance offering and is comprised of industry experts with deep knowledge of private equity, energy, insurance, healthcare, real estate, media, telecommunications, investment products and fintech.

Given the cross-jurisdictional nature of many M&A transactions we work on, our Cayman Islands teams routinely work closely alongside the corporate and finance practices of other Appleby offices. Our unique global footprint enables us to provide a seamless cross-border service to our clients.

 

What advice would you give to the next generation of M&A lawyers?

Trust your judgement and remain committed to delivering the highest quality service to your clients. Clients do not want to just be made aware of the issues, they want practical solutions.

 

What are your predictions for M&A in Cayman Islands over the next five years?

We expect the Cayman Islands to remain at the forefront of global deal making and to remain the offshore jurisdiction of choice for global public and private companies, financial institutions, funds and high net worth individuals.

If global interest rates rise in the near term, as widely anticipated, we expect to see a slowdown in M&A activity as it becomes more costly for buyers to finance transactions. We anticipate higher interest rates could also lead to an increase in restructurings of existing transactions and, potentially, to defaults in certain industry sectors. Unpredictability in oil prices leaves the offshore oil services and drilling sector particularly sensitive to rate rises and we could see repeats of last year’s landmark Ocean Rig case, the largest ever restructuring in the Cayman Islands, which Appleby played a leading role on.

More generally we expect to see the Cayman Islands consolidate its position as a jurisdiction of choice for insurers and re-insurers through targeted legislative initiatives, with the Cayman Islands continuing to take market share from other traditional insurance and re-insurance hubs.

Conquering the globe, one office at a time

The world is smaller than ever and many law firms continue to believe that in order to compete effectively they need to be global. Over the years many have gone down the merger route and while this strategy suits some, it can present difficulties in the long run – firm culture and identity being two big issues to overcome – and besides which, it doesn’t always achieve the desired goal of global dominance. So instead, why not set up your own new bespoke office under your existing brand?

From the perspective of a consultancy like SSQ, nothing excites us more than working with a client from day one to build a new office. It puts a real buzz not just into our own people but into the market as well. We have worked with many successful new jurisdiction and office launches – Goodwin Procter in Paris, London and Frankfurt, Cooley in London, Pinsent Masons in Germany, and Allen & Overy in Barcelona – and many get it right.

A major reason why some firms sometimes flounder is because they fail to prepare properly. A great amount of research and preparation is required; firms need a clear vision about the strategy and tactics behind a new office in a new location. ‘We usually research the new market with a law firm client for at least 12 months before they are ready with a launch strategy. We spend a great deal of time with them, helping us all to understand the objectives and where the firm wants to be in five years,’ explains Adam Brown, SSQ’s director in London.

Firms need to be serious in their belief that a merger is not the right choice and to think realistically about whether their goal is achievable in that specific market. But with the right preparation the world can be your oyster.

What specifics need to be considered?

  • Be clear on sectors and products, both for launch and for future investment: A firm needs to assess the local market and see where there is space for it. This does not necessarily mean ‘is there a gap in the market?’, but a firm must identify a competitive advantage it can bring to play. ‘It’s important to look at who else is operating in the location and who else recently entered; assess what their critical mass is and what their strategy may be,’ advises Alejandro Kress, director of SSQ in Spain.This also needs to be weighed up against the firm’s overall capabilities and investment plans. Cooley launched in London with a litigation and corporate team before expanding into technology, health care, and tax. It has doubled in size in three years. Investment is crucial. Without it a new office can quickly struggle; it is vital that new partners believe the firm has bought into them.
  • Know your market: Firms need to understand how the local market, and clients, operate; how do fee rates and remuneration work for example? Moreover, as SSQ’s director in Germany, Sona Walentin, points out, it is even more important to identify how this will sit against the firm’s existing modus operandi. ‘It’s vital to integrate the intricacies of a specific local market (like fee rates and remuneration) into a firm headquartered elsewhere. These can put pressure on everyone and, if not properly considered, can jeopardise success if the stretch is just too far for the firm to handle.’ It is imperative that both the HQ firm and the new office understand the differences and why they are needed. Get this right and people will support each other.
  • What is the sell? Often, an incoming firm’s brand is not well known and the challenge is how to present the firm’s vision and potential to prospective lateral partners. There needs to be more to the sell than money – though this obviously helps – and the firm must articulate what differentiates its offering from established firms. It’s then crucial for promotion to be consistent. This is where a search consultancy becomes a vital partner. A search firm should cover the market fully and be able to disseminate and control the message. It can also advise on how the market operates. As Melanie Tremblay, SSQ’s director in Paris, explains: ‘You need someone who really knows the players;
    who has great skills and credibility within that market.’Reaching critical mass

    So, you’ve set your strategy, learned your market, and you’re ready to press the launch button. Surely there is an entire team out there, one which will bring with it a great book of business direct from a competitor, creating immediate critical mass and a well-gelled team capable of transacting work. While this can be a great ticket to success, in reality this kind of move is rare. Restrictive covenants and anti-poaching policies make launching with a pre-built team very difficult. A better strategy may be to identify a magnet partner and build the team around them. A longer process, yes, but ultimately it allows the firm to cherry pick talent from across the market and build the best possible team. Ambitious people are attracted to being part of a launch and once the correct leading partner has been secured, finding a team to work with them is often easier.

However, don’t forget, the key to success is welcoming the new office into the wider global business. Integration of the team should have begun during the recruitment process. By taking time to identify the right people, firms can be confident that the newcomers have bought into the firm’s culture. However, it’s important that the most senior members of the firm take time to be involved in the launch and buy into the concept and the people. ‘They need to be visible both during the recruitment process and after the launch so that their enthusiasm is clear,’ suggests Shawn Chen, SSQ’s director in China. ‘The wider firm has to trust the new leading partner; giving them a seat on the global board or executive committee goes a long way in cementing this.’

A new office launch might seem intimidating, but it can be extremely exciting. The market is full of success stories and the opportunities for firms to put their stamp on the increasingly global legal market place. And besides, new competition is always good – it keeps everyone on their toes.

Common law alignment

Cyprus England handshake

Please give us an overview of the current legal market in Cyprus and how any recent developments have impacted your practice?

The main legal framework for M&A transactions (both for private and public companies) in Cyprus is provided by English common law principles and statutory provisions, primarily, the Cyprus Companies Law, Cap 113 as subsequently amended (Companies Law),which is aligned with the Directive 2005/56/EC on cross-border mergers of limited liability companies and the Control of Concentrations between Enterprises Law of 2014 (Law 83(Ι)/2014) (Concentrations Law).

In particular, the Companies Law regulates the procedure to be followed in mergers and acquisitions, schemes of arrangement and amalgamations which in principle entails obtaining the approval from the shareholders and creditors of the merging companies, as well as the sanctioning of the transaction by the competent court.

As an EU member state, Cyprus has aligned its laws with the relevant laws and regulations as regards M&A. Furthermore, M&A transactions involving Cyprus public companies and companies listed in the Cyprus Stock Exchange are also regulated by the following rules/laws:

  • The Public Takeover for the Acquisition of Shares in a Company and Related Matters Law, Law 41(I)/ 2007 (Public Takeover Law);
  • The Securities and Cyprus Stock Exchange Law of 1993 (as amended) (Stock Exchange Law);
  • The Transparency Requirements (Securities Admitted to Trading on a Regulated Market) Law of 2007;
  • The Market Abuse Law of 2016 (which brought the Cypwrus legislation fully in line with Regulation (EU) 596/2014);
  • The Action for Damages for Infringement of Competition Law of 2017 which transposed into Cyprus legislation the Directive 2014/104/EU; and
  • The Cyprus Corporate Governance Code.

The key regulatory authorities designated to regulate M&A in Cyprus are the Cyprus Securities and Exchange Commission (CYSEC) and the Commission for the Protection of Competition (CPC), which is the Cyprus competition authority.

It must, however, be noted that, subject to their industry sector and business activities, both private and public companies may also be subject to regulatory controls during M&A from industry specific regulatory authorities and regulatory regimes (i.e. in case the target company is a credit institution, M&A authorisations may be required from the Central Bank of Cyprus).

Following the upturn in Cyprus economy that has been evident over the last few years, the market is showing significant growth both in terms of incorporation of new companies as well as the M&A sector. In particular, over the last two years there has been a significant increase in the volume of both local and cross-border mergers within the EU region and, in particular, of notable domestic M&A transaction during the year of 2017.

Furthermore, in light of recent developments relating to Brexit, and taking into account that the Cyprus legal system is also based on common law and to a large degree has similarities to the UK legal system, this could lead to a further increase in inbound cross-border mergers of entities which would need to maintain their head office within the EU. Worth mentioning also is Regulation (EU) 1215/2012 of the European Parliament and of the Council, which currently regulates jurisdiction and the recognition and enforcement of judgments between EU member states and which has direct effect in Cyprus and in other member states.

What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

Although most market sectors are showing signs of growth over the last year, the private equity market in Cyprus and the business, banking and financial services, as well as energy and tourism sectors, are all showing significant growth rates.

The stability of the financial sector in Cyprus and the respective growth of the economy have also been significant factors contributing to the increased volume of M&A activity and are likely to contribute to future development. Furthermore, the uncertainty relating to Brexit, and the effect it may have on the business, may lead to an increased level of inbound merger activity.

Further developments at a European Union level and future regulatory reforms seem to be having a significant effect on M&A activities and the restructuring of several large international structures with a strong presence in Cyprus. In addition, the discovery of hydrocarbons in the exclusive economic zone of Cyprus and the ongoing exploration activities of international companies in the area are likely to offer significant M&A opportunities as well as energy and tourism sectors, are all showing significant growth rates.

What are the three biggest challenges to practising M&A in Cyprus at the moment?

Practicing M&A encompasses a number of challenges for both young and experienced lawyers at home and abroad. With that said, it is noted that, due to the nature of the M&A transactions, lawyers practicing M&A may be required to gain knowledge specific to the industry sectors and the business activities of the companies involved, and deal with industry-specific regulatory authorities and regimes.

Besides the diversity of the challenges related to the different industry sectors and regulatory regimes that an M&A lawyer may be called upon to address, practitioners must also keep themselves updated with geopolitical as well as economical changes around the globe.

How does M&A fit into your firm as a whole? Is it easy to collaborate with other teams?

In an increasingly competitive market, success requires an efficient corporate structure that is designed to minimise costs and optimise profits. Whether prompted by an acquisition, spin-off or internal restructuring, EY Law Cyprus helps clients to manage changes to their corporate organisation more effectively. Hence, M&A constitutes one of our strongest areas of practice.

What advice would you give to the next generation of M&A lawyers?

It is important for the next generation of M&A lawyers to keep track of the developments in a number of markets most commonly involving M&A transactions in their jurisdiction, as well as the international and European developments in the tax sector, to have a better grasp of the ongoing trends and challenges. Therefore, next generation M&A lawyers should always conduct independent research both on headline-making transactions as well as on smaller transactions which may affect the future behaviour of specific markets.

What are your predictions for M&A in Cyprus over the next five years?

Subject to the ongoing tax reporting developments, as well as the upturn in the economy, we would expect an increase in proposed M&As in the foreseeable future, both in terms of consolidation of existing structures as well as for expansion of certain groups by the investment or acquisition of new structures.

 

Javier Robalino: This is how the firm needs to feel, behave and believe

How would you define your firm’s culture? How important is firm culture to you?

Culture is of the utmost important to me. Culture is more important than work climate or work environment – they are also important but less so than culture. Culture is what bring us together, what connect us, what make us grow, create, innovate. Culture appears, transpires; culture expresses by its’ self, is spontaneous, but at the same time constitutes the backbone of a firm. I believe culture is what makes us capable of overcoming a crisis and or challenge. Hence, culture is not only important, but the essence of any institution.

Ferrere is an institutional firm. As experts have noted, it is more than a family or professional firm, but has become an institution, supported by – or built upon – a very basic foundation: the firm comes first.

Our culture is supported by certain cornerstones: collaboration, meritocracy, teamwork, in-depth knowledge, leadership, hard work and diversity, among others, something that makes our culture unique. We work very hard to implement these values in the day-to-day activities of the firm. Moreover, I have seen my partners in all our offices and business units working hard to emphasise, and more importantly, to make these values living expressions of the Ferrere culture.


What’s the main change you’ve made in the firm that will benefit clients?

This is not an easy question to answer. We are always making changes, improving and correcting issues and problems here and there. However, if I were to choose a single change that has benefitted clients, it has been the structuring of the firm’s teams by area and industry, in a transversal way, regardless of the city or location.

This change has been of enormous help in Ecuador, because it has helped to strengthen the teams, providing better resources nationwide and doing so in a more efficient way by strengthening and promoting collaboration. Of course, this change was possible due to the fact that we are a lock-step firm with no eat-what-you-kill incentives. Hence, our associates and partners are stimulated to collaborate, to share projects and clients, with no concerns upon the revenue or its origin.


What are the biggest challenges facing firms of your size in Ecuador?

Ecuador has few law-firms the size of Ferrere. We are probably the only firm with fully fleshed offices in three cities (Manta, Quito and Guayaquil). This poses the first challenge: being able to provide services nationwide.

Price competition for quality service is also a big challenge. Clients expect excellence for a fraction of the cost.

Also, technology continues to drive competition. At Ferrere we are significantly investing in technology to keep our legal business up to date. We are always looking for innovative and creative ideas to keep our practice at the vanguard.

Another challenge is dealing with institutionalisation. Recent spin-offs, departures and new outfits in the local market express the need for firms to adapt and improve within an institutional model.


What do you think are the top three things most clients want and why?

Rapid, personal, and effective replies: lawyers invest time and energy keeping a close relationship with their clients. Clients feel rewarded by not only having a lawyer, but a trusted advisor. Frequent communication is vital to maintain a good relationship.

Quality and up-to-date legal expertise: clients with complex and multimillion-dollar businesses want the best talent and advice they can get in the market.

Results: clients want good/positive results. Focus on solving problems, and providing solutions.


What have you found is the best way to retain talent – both at partner and associate levels?

Culture and institutionalisation are key in terms of attracting and retaining talent. Money is important but not the only important thing when you aim to retain talent. Talent is selfish. It expects more than a big pay check. So, we are committed to being very competitive in terms of remuneration within our lock-step model, but we are also working effectively in developing other means to retain talent: meritocratic and periodic evaluations, career plans, specific programs for women and mothers, clear messages, access to interesting and challenging work from early stages of one’s career, motivational programs, graduate funding programs, sports programs, and flexible schedules, among others.

Partners pose a different challenge. They are, and shall be, treated as peers. Managing partners need to understand that they work for the other partners, they serve the other partners; your partners are your bosses. This is how the institution needs to feel, behave and believe. Although this may sound like rhetoric, when retaining partners, we ought to make our peers feel adequately compensated, improve communication, share work, and only then seek accountability.


Since becoming managing partner what’s surprised you most about running a firm?

Everything has surprised me, continues to do so, and I hope it doesn’t quit doing so!

Ferrere made a big move when opening Ecuador and absorbing our practice, so there were many surprises in the first few years. Moving from an eat-what-you-kill model to a lock-step was a major shock: we had to absorb not only the model but the culture behind it. The process produced less than expected casualties. Now, looking back, this is a pleasant surprise and we have generated a very strong team with solid cultural values.

Another thing that surprised me is the responsibility that comes with the position. Managing partners are devoted to clients and the firm. This implies that our work will be construed as a means to favour clients, the institution and its members. When doing so you are able to work for others, helping them grow as both professionals and individuals. It is not an easy challenge, but when institutional values are present, when there is sound leadership and functional and effective corporate governance – as Ferrere’s executive committee provides – then one’s role as managing partner becomes easier.

Keeping the pace with modern business in Guernsey

Aerial shot of cliffside property

Please give us an overview of the current legal market in Guernsey and how any recent developments have impacted your practice?

The local M&A market in Guernsey was relatively active throughout 2017, and this has continued well into 2018. We would characte

rise the market as, for the most part, a “seller’s market”, with a number of buyers (both domestic and international) looking to undertake transactions in Guernsey. Private equity funds and buy-out firms are currently in a cycle where they have excess dry powder and this has driven a significant amount of local M&A activity – particularly in the fund and trust administration sector. However, as Guernsey is a sophisticated international financial centre, the market is exposed to the same economic and political factors as affect the level and type of M&A in larger onshore jurisdictions.

One of the great strengths of Guernsey is that it has kept its Companies Law under review since its introduction in 2008, ensuring that it has kept pace pragmatically with the needs of modern business, and to respond to developments in other jurisdictions and industry feedback. New parts were inserted into the Companies Law, by Ordinance, dealing with the Takeovers and Mergers Panel and the Regulation of Auditors for the purposes of Directive 2006/43/EC. In addition, as part of the ongoing review of the Companies Law, some further potential areas for amendment have been identified through engagement with key stakeholders, with a consultation paper being issued in June of this year. Responses are currently being considered by the Committee for Economic Development with a view to developing policy proposals.

 

What significant trends exist in the Guernsey market presently? Are you seeing these just domestically or internationally as well?

In Guernsey, Appleby has continued to develop its growing specialism in advising major corporates on deals effected by way of scheme of arrangement in the Guernsey courts. Since their introduction in 2008, schemes of arrangement have become a regular and popular means of effecting takeovers, amalgamations and corporate restructurings in Guernsey. It seems that their application has been embraced by both the local courts and industry as a viable alternative to a traditional takeover bid, amalgamation or corporate restructure.

The Guernsey provisions dealing with schemes of arrangement are broadly similar to those in England and Wales.

 

What are the three biggest challenges to practising M&A in Guernsey at the moment?

Across Appleby as a firm, we consider the three biggest challenges to M&A activity in both Guernsey and the Channel Islands as a whole to be:

  • Political uncertainties including Brexit in Europe, the midterm elections in the US and Chinese government scrutiny over outbound deals;
  • US and UK tax and regulatory reforms; and
  • Current macroeconomic and geopolitical factors influencing transactions.

 

How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?

Appleby has experts in offshore corporate, finance, funds, restructuring and dispute resolution. The M&A team plays a central role in Appleby’s wider corporate and finance offering, and is comprised of industry experts with deep knowledge of private equity, energy, insurance, banking, healthcare, real estate, media, telecoms, investment products, regulatory matters and FinTech.

Given the cross-jurisdictional nature of many of the M&A transactions that we work on, our Guernsey team routinely works closely alongside the corporate and finance practices of other Appleby offices. Our unique global footprint enables us to provide a seamless cross-border service to our clients.

 

What advice would you give to the next generation of M&A lawyers?

M&A lawyers need to be as knowledgeable as they can be about not only corporate law, but also finance, capital markets, tax and competition law, so they can understand the transaction they are working on and provide the best advice to the client. In addition, M&A lawyers must understand what is most important for their clients’ businesses and their strategic goals, in order to most effectively represent them. It is important to be able to identify what is worth being tenacious about and what is not – for example, knowing not just the purpose and effect of a warranty, but also whether it is relevant to your client’s business or not, meaning whether you should insist on it or can do without it. Therefore, always be prepared, and focus on developing from being just another average lawyer into being a true trusted strategic adviser for your clients.

It is important to understand that while it is your role to provide advice, it is ultimately the client who makes the business decisions. Too often, lawyers are more aggressive than is necessary, and lawyers making a meal out of something which is not in their client’s interests is never good for anyone.

 

What are your predictions for M&A in Guernsey over the next five years?

Locally, we expect further consolidation and restructuring of insurance and fiduciary businesses during any Brexit transitional period. If the current geopolitical climate of protectionism and trade wars continues, we may see an increase in global restructuring as companies seek to minimise any tariffs imposed on their business and goods produced. Any such movement would undoubtedly have an impact on the M&A market in both Guernsey and the Channel Islands as a whole. That said, Guernsey is one of the leading offshore jurisdictions, so we anticipate that it will remain attractive to global public and private companies, financial institutions, funds and high-net-worth individuals.

Alan Keep on how to run an ‘integrated’ African firm

Alan Keep orange background

How would you define your firm’s culture and how important is firm culture to you?

As an integrated African firm, our culture is driven by a need to operate as one team across all of our offices – and often in countries that we do not have a presence in – to engage seamlessly with our clients and deliver service of a consistently high quality.

Being an ‘integrated African firm’ can sound quite good on paper, but if you do not have the right culture, with people collaborating, working together and feeling proud of their place of work, then it means nothing.

Our culture is free and easy and encourages driven people to work in the way that fits best for them, we don’t have a prototype. Our culture is very important to us. I see it as distinctive as a brand differentiator across our peer firms – it is a key part of our unique selling point, or hedgehog concept, as author Jim Collins would say.

What’s the main change you’ve made in the firm that will benefit clients?

We have embraced the use of technology to deliver services in our industry, and as an enabler to provide clients with the use of our inventory of knowledge. This has been more of a progression than a dramatic change, really.

A recent example of an investment in technology to drive our service delivery is Kira, the artificial intelligence (AI) due diligence solution. We are actively working towards many others, including the use and analysis of data to improve our service offering.

Is technology changing the way you interact with your clients and the services you can provide them?

Absolutely yes, and immeasurably so. You need only think back five years, and five years before that, to see there has been fundamental change that is continuing. At this point in the legal profession, we have only set the baseline, the starting point.

Now we are beginning to understand this capacity, and how to use technology for better, speedier, more efficient ways of delivering service to clients. The AI solution is an easy example in a narrowly focused area, bringing huge efficiency to due diligence in corporate transactions. What I see is the use of similar solutions in various segments of work that law firms do. This change is here to stay.

What are the biggest challenges facing firms of your size in South Africa?

South African law firms are facing an increasingly competitive environment, with many more law firms and alternative provider competitors that were never in the market before. This we see as a positive – the size of the market has reached a good place to attract this competition, and competition brings the best out of us. At the same time, clients are changing the way they procure legal services. They themselves are using data, doing more work in-house and driving their own internal efficiencies. Many multinational clients now have large in-house legal teams doing some of the work law firms used to do.

What do you think are the top three things most clients want and why?

Most clients want access to smart people who are extremely efficient, understand their needs and can provide appropriate advice and solutions at a sensible price. By that I mean a price that matches the context, input and output. If the company’s future is at stake and its has a number of smart lawyers around who are adding value and not wasting time, then most clients are willing to pay a price commensurate with that. But in different circumstances the task may need to be resourced and completed in a very different way, and clients expect a firm like ours to have the experience and know-how to understand the difference.

What have you found is the best way to retain talent – both at partner and associate levels?

The firm’s culture is very important in attracting and retaining talent. It is a key differentiator. We also need to work hard at our own profitability because top-end talent doing top-end work expect to receive remuneration at the top end.

You have to consistently bring in the best work that the brightest minds want to do and you need to be doing it profitably so you can pay competitive remuneration within a culture they want to work in. We have to be aspirational and stay at the top end.

Since becoming managing partner, what’s surprised you most about running a firm?

What surprised me is the complexity around managing a broad range of very talented people and keeping them all moving in the same direction. It is more of a challenge than I had anticipated, but also rewarding because of the quality of ideas that come out when dealing with smart people with very different specialist expertise, all having strong views.

If you have three very smart people, all with strong minds and wanting to go in slightly varying degrees in the same direction, the engagement can be highly stimulating but also challenging.

How has your role/involvement in client-facing work changed since becoming managing partner?

I have needed to be very disciplined as to what type of work I can take on, given the other challenges on my time. I embarked on a wish to do 50:50 management and client work but that’s not realistic and I try and do 70:30.

Obviously, I have to ensure clients’ interests are put first in that equation, so in effect I choose major issues for important clients where I really feel my skills, expertise and experience – sometimes with a particular client – are needed to help the client. If there’s something someone else can do, I should not be doing it.

However, the ‘something else’ might not just be about basic legal skills; it might be about knowledge of that particular client or it might be a multi-disciplinary background. I have worked in various areas in my career which is not that easy to mirror. Keeping in touch with clients and their needs is absolutely essential for a successful managing partner.

Taking chambers to a new level

‘Many years ago, when I first started out in chambers, a male colleague said to me, “It’ll take you years to pick this up, darlin’”.’ Although patronising at the time, Hardwicke’s Amanda Illing now laughs at the memory.

It might not rise to the worst example of sexism or misogyny in a clerks’ room, but it is an example of how the historically male-only environment, prevalent in many sets for decades, could make for uncomfortable working conditions. Change has come to chambers over recent years, however, with women now making up around 15 to 20 per cent of clerks, according to the Institute of Barristers’ Clerks. What’s more, the likes of Temple Tax Chambers and Field Court Tax Chambers boast all-women clerking teams, and many of the administrative and leadership functions within others sets are run by women staff.

Notwithstanding her former colleague’s flippant remark, Illing has always found working in chambers an enjoyable experience. ‘I have worked in the legal profession for 30 years and personally, in every job I’ve had, I’ve been inspired, supported and encouraged by senior men (and women) who saw in me something I couldn’t see in myself,’ she says. ‘As with every industry, there will always be pockets of unacceptable behaviour and men using perceived power and influence over women, so it is good that it feels that these issues can now be aired and that chambers are being encouraged to put guidance and policies in place to deal with it.’

As Illing points out, the Bar has worked hard to become a more modern, diverse and inclusive place to start a career; encouraging dialogue, guidance and instituting policies designed to promote change – including parental leave and flexible working initiatives – and which are beginning to bear fruit. Ultimately, however, the likelihood of meaningful change still rests within the culture and management of each individual chambers, meaning some, invariably, are better than others.

‘There was an equality and respect between lawyers and non-lawyers’

Illing began her career as a special caseworker in the Crown Prosecution Service (CPS). There she worked on one of the UK’s first corporate manslaughter prosecutions brought following the sinking of the MS Herald of Free Enterprise, as well as the second and ultimately successful appeal and release of the Birmingham Six. Later she became the private secretary to successive directors of public prosecutions: the late Dame Barbara Mills QC and Sir David Calvert-Smith QC.

‘The CPS was a very good place to start my career,’ she explains. ‘I always worked in a diverse team and there was an equality and respect between genders and between lawyers and non-lawyers.’ From there, Illing says, it was a ‘natural progression’ and with ‘a certain inevitability’ that she would end up working in chambers, and after a short spell as a commercial/planning/public law clerk she ended up as part of the team that launched Matrix Chambers in 2000.

Illing left Matrix nine years ago to become Hardwicke’s then new practice director (senior clerk), with a brief of leading and reorganising the set’s practice management team. Typical of the forward-planning approach that is synonymous with Hardwicke, the appointment was with a view to future succession planning, and in 2012 when the then CEO, Ann Buxton, retired Illing was confirmed as her successor. Six years on, what advice would she give to her former self, or to others, about making the leap to chief executive? ‘Taking over from a successful CEO can be very daunting, but in my experience the important thing is to not try to be your predecessor: draw on your own skills and personality and make the job your own. You’ll be far more successful that way.’

To paraphrase English poet John Donne, no chief exec is an island. To be a successful leader requires teamwork in the clerks’ room and trust from those you’re ultimately answerable to: the members. Fortunately, Illing has both. ‘I have been incredibly fortunate to be supported by the people at Hardwicke, particularly the heads of chambers (formerly Nigel Jones QC, and now PJ Kirby QC and Paul Reed QC as joint heads), successive chambers management committees and my team colleagues. Having a trusting, open and flexible working relationship with them is crucial to our success.’

As Illing explains, the CEO role has inevitably changed to adapt to each set’s needs and the particular skills and experience of the person holding the position. ‘For some chambers the role is as the finance and business leader, for others the CEO takes a strong marketing lead, and still others there is a heavy focus on client relationship management. For me I am lucky enough to be involved in all of those aspects of the job because it fits well with my previous experience and interests. However, I have a heavy focus on strategic direction, clients, and running Hardwicke as a modern, professional business. Luckily, I work alongside an amazing group of colleagues because I cannot be (and should not be) delivering all these things myself.’

Clearly her leadership is reaping dividends. During the research for upcoming The Legal 500 UK Bar guide, publishing October 2018, Hardwicke received consistent praise from instructing solicitors, and Illing herself is described as ‘trustworthy’ and ‘the shining star of the team’ who has ‘taken chambers to a new level’ and ‘puts the quality of service at the heart of everything she does, while making sure we all feel like a member of her family’.

Still, there are many challenges facing CEOs at the modern Bar: developing new business, career development (both barristers and staff), employee engagement, wellbeing and mental health, regulation, downward pressure on costs, as well as recruitment and retention to name but a few. However, as Illing explains, such challenges can often become opportunities, especially if there are the resources and people in place to take advantage.

‘An example is GDPR; it brought a team of barristers and staff together to work on a time-limited project, and gave us a reason to cleanse our database and commit the time and resources to do a proper evaluation of our records. Before, this exercise would have been a luxury we would have got around to at some point, but with impending implementation of the new regulations we had no choice.’

Illing also reports on the challenge of staying ahead and relevant in a rapidly changing legal services market. ‘Hardwicke is about to launch a rebrand and new website, project managed by a working party of barristers and staff,’ she says. ‘It’s amazing that in only five years since the last website, Hardwicke and the legal market has completely changed. That’s why planning ahead to have the resources to do this sort of thing is so important to continue to stay current, accessible and enable you to appeal to the people you want to attract.’

‘If you have open recruitment practices you will attract a diverse group of talented people’

Chambers CEOs are much more commonplace now than they were three decades ago, and like Illing many of the most successful are women. Indeed, Hardwicke was one of the first sets to appoint a chief exec back in the early ’90s, and since then more women have held the post than men. It is also among a select few sets that possess an all-women senior leadership line-up. It seems, in more ways that one, that it really doesn’t take women ‘years to pick up’ chambers.

‘It’s difficult to generalise, of course, because I believe some people have the combination of skills, temperament, resilience, diplomacy and humour to do well in the chambers environment, while others do not,’ says Illing. ‘However, there do seem to be some character traits in women that can be beneficial in chambers, including emotional intelligence, the ability to multi-task, mediation skills, empathy and a gritty determination to get things done.’

Perhaps the ability to spin plates explains why Illing has been spotted on social media leading a team of Hardwicke hula hoopers at the London Legal Walk and at other events. ‘The hula hooping has been a bit of fun and got people talking. I think it’s important not to take yourself too seriously and to keep it real,’ she says, ‘and it’s surprising the number of people who have wanted to have a go too!’

So how can the present crop of women CEOs empower and inspire the next generation of women leaders? ‘Recruitment practices are obviously different across the Bar, but if you have open recruitment practices, and you pool from a wide spectrum of people, you will attract a diverse group of talented people to roles in chambers,’ adds Illing. ‘I will continue to ensure that recruitment practices in teams I lead are fair and that we do our very best to attract and retain the best talent so we can to inspire the next generation of great leaders.’

Austria’s strong and stable market

Please give us an overview of the current legal market in Austria and how any recent developments have impacted your practice?

While the number of transactions has remained steady at a high level (approximately 180 transactions in the first half of 2018), the deal volume for the first half of 2018 has reached an all-time high since 2012, with a volume of more than €5bn. Deal flow for Austrian targets has benefited from strong business performance of Austrian targets combined with stable economic indicators for the Austrian economy as a whole, which leads to deal stability. Continued low interest rates and the need for businesses to catch up with digital transformation are trends that are global, but are definitely transaction drivers for Austrian companies.

 

What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

Looking at where cross-border buyers come from for Austrian targets, the big three jurisdictions are Germany, the US and Switzerland, though buyers from China also have been active. Sector-wise, over the past couple of years real estate transactions have been very prominent, though there appears to be a bit of a cooling off currently. The industrial sector has also remained strong, which reflects the high level of industrial know how that Austrian companies have in many niche industries. Other strong sectors are the technology sector, software companies and data management. Restructuring deals and an increase of in-bound investments from international investors also play a significant role. One important trend in Austria, which can also be seen in many European jurisdictions and the US, is the increasing use of warranty and indemnity (W&I) insurance. Our firm has closed numerous transactions over the past year where such insurance acted as a bridge between seller and buyer so the buyer could obtain an extended scope of warranty and indemnity protection that otherwise might not have been possible. Private equity buyers are at the forefront of this development.

Another evident trend is the rise in auction processes, especially in real estate deals. Through this the Austrian M&A market has become somewhat more seller friendly. Our firm has led many sell-side deals run as auction processes and practice show how important it is to have a well-structured process with a clearly structured data room to push the deal to a successful conclusion.

 

What are the three biggest challenges to practising M&A in Austria at the moment?

One key challenge is representing buyers in auction processes. The rules of the game are much different to exclusive one-on-one negotiations. It takes a lot of experience to know how far to go in marking up and negotiating the SPA without being kicked out of the process.

Another challenge is having the in-depth legal expertise to deal with the stringent capital maintenance rules Austria has. Upstream guarantees, for example, often do not work and recognising the legal consequences of past dealings between the target and its shareholders can play a significant role.

Another challenge our firm tackles very well is putting together an M&A team quickly and providing stream-lined advice within tight time frames. We strongly believe in providing hands-on, high-level advice led by a partner to achieve tailor-made solutions.

 

How does M&A fit into the firm as a whole? Is it easy to collaborate with other teams?

fwp’s philosophy is to work beyond pure practice group thinking. Our M&A lawyers are trained to think outside the box and have various levels of legal expertise. We place a high value on not having ‘tunnel vision’ lawyers. This allows us to combine all legal skills and know how necessary as a
one-stop shop in an efficient manner. Our firm also places a great emphasis on keeping track of key international legal trends, not only in our daily cross-border work, but also as the exclusive Austrian member law firm of the leading international referral network TerraLex, and of the Association of European lawyers. fwp thus is also very active representing Austrian companies in transactions abroad.

 

What advice would you give to the next generation of M&A lawyers?

Do not to be blinded by the discussion on the use of artificial intelligence. Young M&A lawyers need to focus first and foremost on developing their fundamental skill set. Having expertise in areas such as IP and data protection ill also become increasingly important in M&A transactions, so young lawyers bringing these skills to the table, in addition to the core corporate expertise, will have an advantage. It goes without saying that sectoral expertise is something young lawyers should develop.

 

What are your predictions for M&A in Austria over the next five years?

We expect Austria to remain an active M&A jurisdiction given that top, technologically advanced Austrian companies continue to make strides, all within a very stable economic environment. Austrian companies will remain attractive targets and, at the same time, will continue to expand internationally via M&A deals. We believe these strengths will more than counter-balance any global rise in interest rates in the near term, which is widely anticipated and mean it will become more costly to finance transactions. We also expect a further increase in the use of W&I insurance.