It's the economy, stupid! Or is it? As one would expect, opinions vary wildly as to where the Portuguese economy is heading. Brighter days are coming to stay if you talk to pundits closer to government, but darker times are looming if you are talking with experts from the opposition.
But that is just politics. In the real world – as seen from a law firm's window – things do look a lot better than they did just one year ago, as the Portuguese M&A market follows the global trend and grows by the day.
And although this is partly fed by two big deals – the tender offers on Portugal Telecom (which ultimately failed) and on BPI, a major independent local bank – the market is bustling with medium and small transactions, both national and cross-border.
The reasons are threefold: concentration continues to play an important role in many industries, particularly if you look at it from an Iberian perspective, as is often the case (in the last 10 years Spain invested almost twice as all other EU countries brought together); private equity cash abounds; and the marketplace is ever more transparent.
Noticeable recent changes in the legal environment help make the case for a more attractive shoppers' market:
- The Takeover Directive has been implemented (including a mild version of the breakthrough rule);
- The Companies Code has been overhauled to incorporate new governance requirements;
- Friendly tax rules continue to support certain benefits on amalgamation, joint ventures and restructuring transactions;
- The unusually stiff labour laws are being moved away by far more flexible regulations; and
- Red tape has been drastically cut in all aspects of companies' lives, and real-time access to all relevant information has become a commodity.
From the real economy perspective, M&A activity does look good.
By João Vieira de Almeida