I’ve been incredibly fortunate to be a part of the CEE legal community for the better part of 30 years. I arrived in Prague as a young associate in July 1991 and, after a small hiatus in New York in the mid-90s, have been based in Budapest for the last 26 years, initially with White & Case and for the last eight years with Dentons. While I’ve had the privilege of working with other, more qualified lawyers than I in a variety of commercial situations, my heart and soul has been in the mergers and acquisitions world.
The early 90s in Prague were heady days. When I arrived, the Czech economy was 96% state-owned, and the Prime Minister at the time, Vaclav Klaus, had devised a privatization plan to get most Czech companies into private hands as quickly as possible. The laws and transaction norms were evolving rapidly with a lot of “firsts” – the first “direct sale privatization” under the new privatization law, the first privatization in the form of an asset sale, the first competition filing under the new competition law, etc. (I remember one occasion, which struck me as funny at the time. A colleague and I submitted the filing in the morning and were told to collect the approval after we’d enjoyed a nice lunch.) I worked alongside talented young Czech lawyers to negotiate literally dozens of transactions with foreign investors. The level of intellectual rigor and dedication of the team was remarkable, and many of those lawyers have gone on to establish leading Czech firms or become cornerstone partners at international law firms.
In the first 15 years after I moved to Budapest in 1997, my time was dominated by work for private equity investors on growth equity investments and LBOs throughout CEE, often in regulated industries such as telecommunications or health care. We were required to assess legal and regulatory risks rapidly and with a commercial mindset, and to implement complex equity and debt structures under laws that hadn’t been prepared with such structures in mind. As the deals became larger and more sophisticated, we were tested increasingly against the best of the London and Wall Street law firms.
Over the last ten years, the family offices and other financial groups in CEE and SEE have emerged every bit as sophisticated as the regional and global private equity houses, acquiring leading businesses across the region and throughout the world. The M&A legal community has evolved with them. Private practice lawyers from CEE/SEE act as main transaction counsel to their clients in complex transactions in jurisdictions hundreds and sometimes thousands of miles away.
Today, I see two main trends in the CEE/SEE M&A market. Firstly, there is the increased role of politics in transactions in the region. In recent years, regulations in the areas of foreign direct investment, competition, and other areas have sometimes threatened to inhibit foreign investment in strategic sectors such as energy, transportation, and infrastructure. M&A lawyers have needed to work with our regulatory colleagues to help our clients avoid potential minefields. However, such interference currently seems to be receding in sectors such as energy and military defense, in response to the war in Ukraine, and may diminish more broadly amid the general economic uncertainty.
Secondly, the technology sector in the region has come of age, and M&A lawyers are working with talented founders and their venture capital backers on exciting investment, “buy-and-build,” and exit transactions. Here, lawyers with a mix of intellectual property, labor, and corporate skills reign supreme. Even amid slowdowns in technology deals in the US and Western Europe, the pipeline appears to be quite strong in CEE/SEE.
So, from where I sit, the CEE/SEE corporate legal community is currently in a great place. So many of the lawyers, with whom I have worked through the years, remain active today and continue to mentor the younger generation. Our clients are constantly pushing us to be more international, and we’re being joined by waves of new associates who have studied and/or worked abroad and are confident and motivated to work on global transactions. I’m looking forward to seeing how we’ll evolve between now and the 20th anniversary issue of CEELM!
By Rob Irving, Co-Chair of Europe Corporate Group, Dentons