ODI Law Partner Gjorgji Georgievski, EY Law North Macedonia Manager Jana Nikodinovska, CMS Partner Marija Filipovska, Popovski & Partners Partner Ognen Martinov, and Lalicic & Boskoski Partner Vedran Lalicic talk about what practices have been keeping their firms busy and their outlook.
The Champ: Corporate/M&A
In Corporate/M&A seems to have been the busiest practice in North Macedonia, throughout the year, with Georgievski and Lalicic believing this trend is strongly connected to the COVID-19 pandemic. According to Georgievski, “post-pandemic attractive valuation levels and tax considerations” were the primary reasons for the increase in M&A. ODI Law advised on a few M&A deals in that regard, he says, including “the owner of retail chain operator Kit-Go on the sale of the company to Viva Fresh,” as well as “Kin and Carta on the Macedonian law aspects of the acquisition of software development company Melon Group.”
Lalicic, on the other hand, explains that the dynamic growth of M&A was related to the easing of the COVID-19 measures. As a result of it, he says, “many new investors were encouraged to start their business in North Macedonia. Also, many existing businesses were encouraged to expand their business activities.” According to him, in 2021, Lalicic & Boskoski “had numerous cases of founding new companies, especially in the IT sector.” As for the specific deals, he says the firm was involved in the sale of City Connect to Transcom, as well as in the acquisition of the shares of Eltek Explosives by Mashinokop.
Martinov believes that foreign investments played a crucial role in North Macedonian M&A. “Increase in foreign investments locally gave a boost in legal business from a corporate/M&A perspective,” he says. As an example of that, he points to Fortenova Grupa’s EUR 615 million sale of its frozen food business to Nomad Foods, in which Popovski & Partners represented the seller. EY Law’s Nikodinovska also points to North Macedonia as an attractive destination for foreign investors due to “the stabilization coming from NATO membership in 2020,” but also highlights “legislative developments with new regulations and regulatory compliance requirements imposed on Macedonian companies” pushing the market to develop in this direction.
Lastly, Filipovska explains the M&A pipeline has been fueled by leapfrogging in renewable energy projects. “In the past decades, North Macedonia was not developing renewables when compared to the region and the EU countries,” she says, but “it is my pleasure to see that the government has seen the need for more sustainable and green energy.” The CMS Partner reports that “North Macedonia adopted a strategy for energy development until 2030, which introduces the ambitious plans to go green in a very short span.”
The Runner-Up: Data Protection
Several lawyers also pointed to a spike in data protection work in North Macedonia. “Our practice in the GDPR area was driven by the changes in Macedonian legislation,” Lalicic says, explaining that “the new data protection law was adopted in February 2020 (effective from August 2021) in order to align the national data protection legislation with EU legislation.”
Nikodinovska agrees, adding that “the regulatory landscape in North Macedonia set forth regulatory compliance challenges for Macedonian companies coming from the alignment of Macedonian laws with the EU regulations within the EU accession process, in particular, GDPR and AML regulations. Accordingly, a portion of our services during 2021 was focused on helping Macedonian companies meet data privacy requirements.”
The input follows Georgievski’s Hot Practice interview with CEE Legal Matters in 2021, in which he highlighted that data protection was the firm’s busiest practice, “primarily as a result of the looming end of the transition period of the new data protection law in the country.”
Time to Refocus?
Martinov expects that their corporate practice will “still be one of the busiest practices,” with Filipovska being equally confident since she expects the “positive trend of numerous energy projects will continue, and that sustainability and renewables projects will be increased and well supported by the authorities and the local market.” Similarly, while acknowledging that the practice “has slightly slowed down, due to our clients’ justified fear that arose from the outbreak of the war in Ukraine,” Lalicic stresses they “are very optimistic that in 2022 our practice will increase its activity compared to the past two years.”
Others are more reluctant in their positive outlook with Georgievski saying that “M&A activity could be well decreased in 2022 due to several factors, including the uncertainty arising out of the war in Ukraine, high valuations, and rising inflation. Another issue for some investors might be a rise in the cost of capital and potential tax increases.”
The bleakest of outlooks was offered by Nikodinovska: “the war in Ukraine at the beginning of 2022 and the associated economic crisis gave the final shock to the Macedonian economy, leading to frozen M&A deals.” She does see opportunities elsewhere though. While Martinov expects a rise in litigation work, Nikodinovska believes that, in the future, they will see an increased demand for compliance and governance services, “taking into consideration the challenges companies are facing from the constant change in the economic and legal environment and the associated risks.”