Private Practice Powerlist: Eduardo Mayora

Join Legal500 TV for a conversation with managing partner Eduardo Mayora. Watch the Private Practice Powerlist video or read the full transcript below.

 

Could you speak about some of your most memorable cases? What qualities did you bring to the table, and what did that process teach you?

Yes, of course. It seems to me that probably two cases come to mind. One of them was the first international structure of finance deals that took place between a state entity and Banco de Roma. In this case, for the first time, our laws allowed for a state entity to go to the financial markets and to secure financing from a private bank.

We’re speaking of 1984 and so I was doing things for the first time in our jurisdiction, and I was working with international law firms both in Rome and in New York and in Guatemala. So that was very exciting. That was very important because it became the basis for future international financial transactions between international banks and what animal and state entities.

The second is the process in order to privatize the telecoms. This took place between 1996 and 1998. Again, we didn’t have any law, any rules in order to achieve a privatization. We had a lot of opposition. In both cases, I was a private lawyer in my law firm, but providing legal counsel to the Guatemalan state. And in this second case, there was a lot of opposition on behalf of the unions, on behalf of the political left and a lot of sceptics.

And so we had to work on the legal amendments in order to achieve the privatization of the telecoms. And in addition to having achieved that, I had to submit it before Congress and when it was challenged before our constitutional court, I had to defend the challenge and thank God it was successful. So when the law was finally passed and the challenge was, let’s say, successfully defend it, I then had to be the lead counsel together with Chuck Pittman from Washington and working with JP Morgan.

And it was still around the one of the Big eight at the time. I had to work with them to bring the process to fruition. And thankfully the telecoms were privatized very successfully. There was no monopoly from day one. The market was open and in competition and it was a success story. I think probably those two cases are the most interesting and important that I have worked, that I have had the responsibility of bringing about.

 

What due diligence techniques are unique to M&A transactions carried out in the banking sector, where financial intricacies require a more nuanced approach?

Well, I think that the main difference when it comes to a merger or an acquisition of financial banking entities more specifically, is the fact that those entities are regulated and that regulators are very jealous of the, let’s say, any process that could bring any danger to the banking institution.

And so in addition to the normal elements of a banking sector, M&A, it is very important for both teams to work with the regulator, to meet with the regulator to explain what it will the merger or the acquisition bring with the table and of course, to get clearance. In many jurisdictions it is necessary to obtain clearance from the banking regulator before a merger or an acquisition of a bank can take place.

So it seems to me that this is one very important element. Then the other element I think that’s very important is that the A bank is about trust depositors, investors and creditors out the bank clients of the bank need to maintain a very high level of trust. And so a merger and acquisition of a banking institution has to be carried out such that the final result will bring more trust to the table, to the market, and not create any doubts, any suspicion as to whether the bank was acquired because it was in trouble or whether it needed to merge because it had some sort of deficiency, etc.. So I think those are probably the two main differences.

 

Keeping in mind the international nature of financial markets, what steps do you take to harmonise compliance with diverse, global regulatory frameworks?

I think that it is still true that there are very diverse rules and approaches to financial regulation across different jurisdictions. However, the globalization, the most recent one, because of course in human history there have been several globalization, but the most recent globalization process has brought about since the end of the Uruguay Round in the nineties has brought about considerable common grounds for financial regulation, and the regulators meet and talk to each other and have organizations even having to do with the basis for regulatory legislation such as the layer processes and the the BSE that let’s say, versions of regulatory frameworks.

So it seems to me that these days, although they various rules and nuances are important. Thankfully, there is a lot of common ground among regulations and among regulators, and this makes things easier when it comes to a cross-border acquisition or a cross-border merger or financial agreements among banking institutions.

 

When handling securities-related M&A transactions, how do you navigate emerging fintech considerations?

It is a very interesting question because it seems to me that today there are there is still a divide and there’s still a gap between the developed and very sophisticated jurisdictions that have already regulated fintech and that have had enough by way of transactions to draw experience from.

And then there are other jurisdictions of smaller developing countries, such as mine and other jurisdictions where we have offices that have not really regulated or not to the extent necessary. FinTech firms or business firms and even transactions. So sometimes you need to be capable of using old rules and old models to fit fintech transactions or transactions among firms that are in the fintech business.

But in short, coming to the east of your question, if the transaction involves securities issued in the capital markets yet again, it is very important to be able to work with the regulator and to be able to reveal the kinds of risks to the investors that the transaction may bring about it. I think that disclosure in in transactions where securities are registered in public markets.

Disclosure is the name of the game. You really need to be very careful about disclosing to investors those who transact and those who just remain as passive investors to reveal exactly what the risks are and what the elements of the transaction are in these fintech related firms or business firms.

 

Given how complex the M&A process can be, how important is a multidisciplinary approach for a successful practice, in your view? What are some of the other disciplines that have helped you gain useful insights and enriched your practice when it comes to M&A? 

Yeah, I think that is very important, really. Firms today, business firms are very complex. Even smaller sized firms in the sense that they, for example, have very valuable intangible assets, sometimes assets that have not been entirely protected. Sometime times assets that are extremely valuable and have not been even correctly identified and will be part of the deal. So this multidisciplinary approach has to bring to the table people who are financially very knowledgeable IP lawyers who can understand and can identify those intangible assets that will have a very important impact, positive or negative in terms of the success of the transaction.

You have to bring in those who have technical knowledge and will help the lawyers and the accountants look for the risks that that the firms involved are those risks that are peculiar to those firms. It is not the same to work in the merger of a, for example, power generation plant than to work in the merger of a fast food chain.

The nature of the risks, the nature of each one of those businesses is so different that you need technicians. You need people in the business who understand where do you need to look for risks in your due diligence? How do you negotiate whatever findings, your due diligence brings about and how do you attribute the real probability that the risk might become a loss so that the transaction can come through and risks will not be overvalued or undervalued? You need a multidisciplinary approach. You need a real team.