On the face of it, M&A is not a hot topic. The financial crisis has seen acquisition finance harder to obtain, the multi-billion dollar cross-border deals of 2007 are a distant memory and clients are more interested in managing their liabilities. Indeed, the number of corporate partners helping out their insolvency departments is increasing by the day.
But these are interesting times. And the crisis is making lawyers diversify instead of rubber stamping deal after cookie-cutter deal. Hedge funds and private equity houses are buying strategic stakes, industry buyers are in the ascendency and distressed M&A is creating plenty of opportunities. With valuations so low, many strategic buyers are taking advantage and purchasing targets with whom they have great synergies.
It is easy for such strategic companies to raise capital if little leverage is required. The first quarter of 2009 saw more capital raised that the first quarters of any of the past 10 years. Industries such as pharmaceuticals are thriving in this area. Similarly, at a lower level, any companies with spare cash are taking advantage by buying up suppliers, printers, manufacturers and the like. In the long term, this shrewd bargaining will reap large rewards.
Corporate departments at international firms are taking on less traditional work too. As the cross-Atlantic and multi-jurisdictional European deals dried up, the larger firms took on roles on deals in less traditional jurisdictions. It is therefore essential for them to know the intricacies of legal rules in smaller countries. For example, many lawyers in the Americas will be interested to learn that the legal framework and economy of Peru makes it attractive for investment at the moment. And that country is the only one in Latin America still growing.
This year's IFLR guide to mergers and acquisitions contains many similar tips alongside more technical articles, to help international lawyers navigate the tough M&A landscape. For example, lawyers from Herbert Smith discuss the options available to boards of companies in trouble. Company voluntary arrangements and pre-packs aren't typical M&A tasks, but corporate lawyers can play a key role in the survival of struggling institutions.
Restructuring and insolvency departments are deliberately kept small during the good times. So during the bad times they need all the help they can get. M&A lawyers can put their transferable skills to good effect.
Nicholas Pettifer