Mergers & acquisitions (M&A) plays an instrumental role in shaping the economy. Over the years, M&A deals have expanded both in scale, frequency, and complexity. Given the COVID-19 pandemic’s impact on deals execution, the economic uncertainty, coupled with strengthened antitrust laws across jurisdictions, M&A lawyers will have to leverage their skills to navigate these testing times. In this inaugural ranking, we celebrate the top M&A lawyers who demonstrate practical experience and overcome the numerous challenges to complete the deals.
JONATHAN B. STONE
TRAN TUAN PHONG
LUKY I. WALALANGI
GRACE C.G. YEOH
As vaccinations occur globally and the threat of the COVID-19 pandemic recedes, dealmakers are beginning to feel more optimistic about M&A in the Asia-Pacific region in 2021. According to Reuters, coronavirus-spurred growth in the technology sector will help drive M&A activity in the Asia-Pacific this year, citing predictions from bankers and lawyers, with the potential easing of Sino-U.S. tensions likely to revive Chinese outbound investment.
Deals involving Asia Pacific firms totalled $1.2 trillion in 2020, up 12 percent from 2019, reports Reuters Seven of the year’s 10 largest transactions were announced in the third quarter, which in total accounted for 40 percent of the year’s deals by value. High technology and telecommunications companies surged to a 23 percent share of deal value, up from 14 percent last year, while retail and consumer products and services firms also reported growth, Reuters added.
“COVID has dramatically accelerated digitalisation, e-commerce and fintech,” Jung Min, co-head of merger and acquisitions (M&A) at Goldman Sachs in Asia, excluding Japan, was quoted as saying in the Reuters report.
“Companies that have benefited are now suddenly much larger in size and financial scale, creating significantly more potential to make strategic investments,” he added. “Industry disruption, change and transformation will continue and drive the larger trans-actions.”
In the latest such move, Qatar’s telecoms company Ooredoo and Hong Kong conglomerate CK Hutchison Holdings are exploring a deal to merge their units in Indonesia, the world’s fourth most populous country, Reuters said. Samson Lo, UBS’ head of Asia M&A, was quoted as saying that the outlook for China outbound deals was positive, despite persistent regulatory pushback from many countries. “There continues to be an appetite for good quality assets in Europe,” he said.
In a report published in January, law firm Allen & Overy flagged the potential return of Chinese healthcare sector investors to the U.S. market for the first time in many months on easing trade tensions, Reuters noted. Antagonism between Washington and Beijing over the past year under outgoing President Donald Trump has hampered deals. Investors say the Biden administration may not mean an instant thaw in relations, but will likely provide a more predictable policy approach.
Dealmakers are also counting on a steady pipeline of cross-border deals involving Asian companies’ strategic investments as well as divestments of multinational companies in the region, said Reuters. “We expect cross-border activity to be a prominent feature, although it’s unlikely to be China outbound driven like in years past,” Richard Wong, Morgan Stanley’s Asia Pacific head of M&A, was quoted as saying. “We expect it to feature Asian sellers of overseas assets ... or highly selective strategic acquisitions overseas.”
China and Japan led Asia’s M&A growth in 2020, against a 5.5 percent decline globally. China, the world’s second-largest economy, recovered strongly from the earliest coronavirus outbreak with a 28 percent increase in deals from 2019, said Reuters. Japan contributed half of the region’s mega deals worth $5 billion or more, including Nippon Telegraph and Telephone Corp’s $40 billion tender offer for NTT Docomo.
Private equity-backed deals in the region reached a record high of $129 billion, up 51 percent year-on-year, Reuters noted, adding that despite the deal bonanza, M&A fees dropped to a five-year low of $4.2 billion as fewer transactions were completed this year compared to 2019, Refinitiv data showed.
Dealmakers have also cautioned that China’s latest anti-trust crack-down on its tech companies could be deterrents in future M&A, Reuters said, noting that Morgan Stanley topped the region’s league table for announced M&A deals in 2020, followed by Goldman Sachs and CICC.
Luky I. Walalangi, founder and managing partner of Indonesia’s Walalangi & Partners, was named as one of ALB’s Asia Top 15 Lawyers. When asked about the trends he saw in his home jurisdiction in the past year, he said it was a “mix of (i) inbound investments, focusing on project development of real property, TODs and energy (ii) few foreign divestment from leasing and multi-finance companies (iii) internal restructuring of various group companies to maximise the synergy effects within the groups and to optimise their positions in the markets and (iv) significant increase of interests on smart urban facilities development and utilisation of artificial intelligence.”
“Lack of face-to-face meetings during the pandemic causes negotiation between the parties longer time to complete; particularly because online meeting poses its own challenges for parties to convey their messages across. To overcome these challenges and to help the parties to achieve their goals, we excitingly and happily expand our roles not only as ‘legal counsels’ of the clients, which was a typical role before the pandemic, but now to also serve as a ‘bridge’ of communications between our clients and the counterparties and to help them accomplish their commercial deals. We do expect this to continue in the future.”
—Luky Walalangi, Walalangi & Partners
However, there were notable challenges. “Lack of face-to-face meetings during the pandemic causes negotiation between the parties longer time to complete; particularly because online meeting poses its own challenges for parties to convey their messages across,” said Walalangi. “To overcome these challenges and to help the parties to achieve their goals, we excitingly and happily expand our roles not only as ‘legal counsels’ of the clients, which was a typical role before the pandemic, but now to also serve as a ‘bridge’ of communications between our clients and the counterparties and to help them accomplish their commercial deals. We do expect this to continue in the future.”
Meanwhile, in Thailand, in most industries other than hospitality and real estate, M&A was at the same level as the previous year, according to Weerawong Chittmittrapap, senior partner at Weerawong, Chinnavat & Partners, and another of ALB’s Asia Top 15 Lawyers. “However, there were not many M&A deals in the hospitality and real estate sectors, which were hit hardest by the COVID-19 pandemic, as many may have expected,” he says. “This was due in part to the belief that the situation in these sectors, which rely heavily on tourism and people’s confidence in the country’s economic situation, will significantly improve after people in Thailand and elsewhere have easy access to COVID-19 vaccines.”
“Investors are more concerned with risk management, so often more robust diligence is required and more factors are considered in valuations. We work closely with clients not only to ensure that they act prudently, but also to help them navigate their way through these challenges. Since meetings in person are not as convenient as before, all parties concerned need to rely on technologies and virtual meetings to maintain communications.”
—Weerawong Chittmittrapap, Weerawong, Chinnavat & Partners
Weerawong also reports challenges to dealmaking in the past year. “Investors are more concerned with risk management, so often more robust diligence is required and more factors are considered in valuations,” he notes. “We work closely with clients not only to ensure that they act prudently, but also to help them navigate their way through these challenges. Since meet-ings in person are not as convenient as before, all parties concerned need to rely on technologies and virtual meet-ings to maintain communications.”
He feels that the pandemic has caused clients relationships to evolve. “Our relationships with clients have been enhanced as we have been able to advise them on the opportunities and challenges presented by the unprecedented events of the past year,” says Weerawong. “We continue to provide strategic advice as a trusted advisor to our clients, with in-depth understanding of their business and the risks involved, mindful of the economic and financial context.”
Weerawong says that after introducing a work-from-home policy for lawyers and staff, the firm was able to continue with business as usual. “Virtual meetings have been widely accepted and welcomed by our clients and this is expected to continue because the major advantage of this technology is the elimination of transportation time,” he says.
What would be important attributes of successful transactional lawyers in the Asia-Pacific region today? Erwandi Hendarta, senior partner at Hadiputranto, Hadinoto & Partners, and also one of ALB’s Asia Top 15 Lawyers, says a diverse mix of skills is necessary. “The world is more complex today with the intersections of many things, he says. “I was fortunate because I spent the formative years of my career outside law. I trained and worked in the central bank of Indonesia (Bank Indonesia) and as an investment banker with Schroders. Also, I benefitted greatly from getting the MBA and LL.M. education in the United States. By having that background, I learned, appreciated and got to enjoy the interlocking of regulatory, business and law. For me, the ability to synthesize different yet intertwined aspects of a transaction is a key attribute, more so in the world now where so many aspects converge. Also, having lived abroad I enjoy interacting with diverse foreign clients.”
Walalangi feels that while legal skills are important, they make up just one of the various elements. “Another aspect that is equally crucial is the ability to carefully listen as to really grasp the real intention of the parties, which may not always be immaculately expressed, and subsequently deliver it across to the other side and negotiate and find the right balance between the opposite interests,” he notes.
For Weerawong, to be successful, lawyers need to step into the shoes of the client to see things from their perspective. “The main components of a transaction can be learned through workshops and seminars, but the right mindset and practical experience are required to understand the finer points and nuances required for a successful closing,” he says.
The right law firms can also help hone these skills. “The firm has courses and events so our lawyers are exposed to the different aspects of a transaction,” says Hendarta. “And the firm being a member firm of Baker McKenzie naturally gives us considerable global exposure.”
Walalangi says that at W&P, lawyers are “continuously honing these skills, either through internal trainings and, depending on his/her levels, through direct involvement in various aspects and stages of transactions.”
In terms of advice to aspiring young transactional lawyers starting out, Walalangi says that he believes that everyone has his/her unique career path. “Nonetheless, one should use all circumstances and experience to learn and to grow, because as Brian Herbert said, while the capacity and ability to learn is a gift and a skill, yet the willingness to learn is always a choice,” he says.
“A lawyer is only a frame maker. The businesspeople are the painters. A lawyer can be an excellent frame maker but without understanding the painting, the frame that you put around the painting will not achieve its purpose, which is to show the beauty of the painting. So, aspire to know the law at its fullest, but at the same time be a curious person wanting to understand other aspects of the clients' businesses as well.”
—Erwandi Hendarta, Hadiputranto, Hadinoto & Partners
Meanwhile, Weerawong says that lawyers should read about a wide variety of business topics and develop their active listening and other soft skills. “Set goals and be focused and determined in meeting them,” he advises.
And Hendarta draws an analogy. “A lawyer is only a frame maker,” he says. “The business people are the painters. A lawyer can be an excellent frame maker but without understanding the painting, the frame that you put around the painting will not achieve its purpose, which is to show the beauty of the painting. So, aspire to know the law at its fullest, but at the same time be a curious person wanting to understand other aspects of the clients’ businesses as well.”
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