2015 is being again an extremely busy year on the M&A side in Luxembourg, with even more activity than the previous year.  One cannot set aside that there was a concern about the Lux Leaks but eventually investors kept faith in Luxembourg.  This combined with the financial crisis exit brought many deals on the table.

For example, in July 2015, KBL European Private Bankers, headquartered in Luxembourg, acquired Brown Shipley, an independent company operating on the financial planning in the UK.  In May 2015, the Swiss group ExecuJet Aviation Group AG was acquired by Luxaviation, the most important business aviation group in Europe, hence becoming the second most important business aviation group in the world.

Vietnam is one of the largest recipients of M&A from Japan, Korea, Singapore and, to a lesser extent, the US and European Union.  After the first wave of investments in 2011 – 2013[1], Vietnam now faces competition from Indonesia, the Philippines and Myanmar.  Meanwhile, China is reforming its Foreign Investment Law and streamlining the procedures for foreign investment.[2]

At the Spring Economic Forum at Nghe An, Vietnam in April 2015, JETRO issued a survey from over 400 Japanese investors in Vietnam, which revealed that the main concern is the lack of transparency within the law, followed by an underdeveloped support industry.[3]  Meanwhile, Bloomberg recently described Vietnam as Asia’s next economic tiger, supported by the potential of its low labour cost, young population and sizable local market.[4]  Vietnam is now the US’s largest trading partner in the ASEAN region.  However, while Vietnam is already among the top 8 trading partners of Korea, it ranked as Japan’s 14^th largest, below Malaysia and Thailand.[5]

The question now is what the Vietnamese government can do to address foreign investors’ concerns and how such investors can overcome the difficulties in Vietnam to take advantage of Bloomberg’s aforementioned economic potential.  I would like addresses the recent changes that will have positive impacts in Vietnam, and a strong message that now is the time to accelerate M&A investment to Vietnam.

In line with general market optimism in Japan since the introduction of “Abenomics,” M&A activities in Japan have been on the rise since 2012, both in terms of number of deals and transaction value.  The depreciation of the Japanese yen, a result of “Abenomics,” continues to make Japanese companies attractive acquisition targets for foreign companies and private equity funds.

In terms of outbound transactions (where the acquirer is a Japanese entity and the target is a foreign entity), many Japanese companies, driven by a sense of crisis as a result of the shrinking domestic market, are pursuing growth opportunities by acquiring suitable foreign targets.  As such, the volume of outbound transactions has also remained buoyant despite the depreciation of the Japanese yen.

All in all, the current M&A landscape in Japan remains upbeat.

A clear distinction should be made between 2014 and 2015 in relation to the Greek M&A landscape.  During 2014 the increase in deal volume was a clear marker of the investors’ renewed interest in Greece.  However, since December 2014, the well-known, political and economic developments, including negotiations with the institutions, Grexit risk and the newly announced elections (scheduled for September 2014) have made both foreign and domestic investors extremely reluctant.  We are looking forward and are confident that, once the situation is stabilised, a new era of opportunities will commence.

The M&A activity in Ukraine remains practically dormant.  Given the political instability, there is little interest from foreign investors in acquiring Ukrainian assets.  Also some of those foreign investors who have previously acquired Ukrainian assets are looking to divest them.  This scenario attracts Ukrainian buyers who try to benefit from the situation and often acquire such assets with very significant discounts.  There is also a significant increase of M&A transactions related to distressed assets.  It is expected that aggressive foreign buyers will likely follow the suit and try to enter the market with the purpose of acquiring undervalued assets in Ukraine but this has not yet become a massive trend.

Belgium’s strongest industrial sectors are the food and beverage industry (chocolate, beer, biscuits), manufacturing (automotive, carpet industry), transport and logistics (logistical centre of Europe, highly developed transport network and presence of international hubs of major logistics companies), the services industry (financial institutions, consultancy) and the TMT sector (characterised by a lot of start-up companies and an excellent network infrastructure).

Belgium is a country with a lot of small and medium-sized companies, many of which are family-owned.  These shareholders often prefer to have a majority share, or be at least a ‘reference’ shareholder, in order to be able to keep the control over their company.  When, at a certain point in time, these reference shareholders are no longer able to make the necessary investments to support their company’s growth, they often prefer to sell their participation rather than to see it become diluted in the context of a capital increase, where another shareholder takes over control of the company.  As a result, there are generally a lot of interesting investment opportunities for both industrial and financial investors.

There continues to be increased M&A activity in Switzerland.  Large caps and in particular listed companies have been highly acquisitive, especially in the TMT and Life Sciences industries.  A number of large strategic transactions closed in 2015, e.g. the asset swaps between GlaxoSmithKline and Novartis, the disposal of SIG, the disposal of Kuoni’s travel agency business and the merger of Holcim and Lafarge.  There is higher appetite for outbound transactions, i.e. Swiss companies acquiring abroad, compared to divestments of Swiss businesses.  Key target markets for many Swiss companies are the US, Germany and China.  Outlook in the SME segment is however prudent due to the strong Swiss Franc.

So far global M&A activity has made a phenomenal start to 2015, with the much awaited rush of deals finally starting to happen.  The $2.30 trillion invested represents the highest recorded value of announced deals globally since H1 2007, when a record $2.60 trillion was invested.

Announced private equity deals as a sub-sector of overall M&A activity totalled $267bn.  However this figure is still 57% lower than the record breaking 2007 time period, the biggest difference in 2015 being the amount of “secondaries” taking place compared to previous years, with these deals representing 22% of all PE deals by value.

The current landscape is busy with many larger transactions being completed exceeding $100million.

Cross-border M&A activities are increasing relatively to new direct investment activities.  The Government is also pursuing an aggressive plan to equitise hundreds of State enterprises, which may create opportunities for investors in a number of attractive sectors.  On the other hand, the trend of merger and consolidation of financial institutions continue as they try to cope with the increasingly competitive market.

No big regulatory changes in New York, this area has already been through it all.

The Listed Companies (Substantial Acquisition of Voting Shares and Take-overs) Ordinance 2002 (“2002 Ordinance”), has recently been repealed by the Securities Act 2015.  Under the 2002 Ordinance, a Mandatory Tender Offer was required to be made where the shares being acquired of a listed company exceeded 25% or more.  However under the new Securities Act 2015 the thresholds triggering a Mandatory Tender Offer is the acquisition of more than 30% shares.  Further while the 2002 Ordinance has been repealed, the Listed Companies (Substantial Acquisition of Voting Shares and Takeovers) Regulations 2008 issued pursuant to the 2002 Ordinance continue to be in force.

The Competition Act 2010 (Competition Act) has introduced certain new concepts for which there are no precedents in Pakistan.  The Competition Act prohibits the abuse of dominant position, prohibits certain agreements, requires approvals for mergers and acquisitions and prohibits deceptive marketing practices.

Under the provisions of section 11 of the Competition Act, no undertaking can enter into a merger or acquire shares or assets of another undertaking whereby competition is substantially lessened and a dominant position is created or strengthened in the relevant market.  Where an undertaking intends to acquire the shares or assets of another undertaking or two or more undertakings intend to merge the whole or part of their businesses, and such acquisition or merger meets the pre-merger notification thresholds stipulated in the regulations prescribed by the Competition Commission of Pakistan (Competition Commission), such undertaking or undertakings are required to apply for clearance from the Competition Commission of the intended merger/acquisition.  Under the Competition (Merger Control) Regulations 2007, a merger is deemed to have occurred if, among other things, one or more persons or other undertakings who or which control one or more undertakings acquire direct or indirect control of the whole or part of one or more other undertakings.

Any agreement containing exclusivity or non-compete provisions would have to be considered under section 4 of the Competition Act which prohibits agreements which have the object or effect of preventing, restricting or reducing or distorting competition within the relevant market.  If the relevant agreement falls under the ambit of section 4 of the Competition Act, it would require exemption from the Competition Commission prior to the agreement being executed or becoming effective.  The Competition Commission normally grants an exemption within 2-4 weeks of an application being made.  Such exemption is normally granted for a specific period and is renewable at the discretion of the Competition Commission.

We are not aware of any recent legal or regulatory change of the Luxembourg takeover bids or, of the squeeze-out law and of the Luxembourg law dated 10 August 1915 concerning commercial companies, as amended from time to time, which would impact M&A transactions in Luxembourg.

The regulatory changes in the financial and especially banking industry (e.g. capital reserve requirements and increasing compliance costs) have triggered significant M&A activities on the sell- and buy-side.  Another area to watch is the restriction on visas and work permits which might have an effect on M&A in Switzerland as the Swiss industry is highly dependent on the supply of qualified immigrants.

In line with the AEC integration schedule, the Government is introducing a number of dramatic changes to the legal framework for investment, securities and real estate.  The changes amongst others simplify investment procedures and M&A processes, reduce the difference in the treatment of foreign investors and local investors in M&A transactions, allow foreigners’ ownership of personal real properties in Vietnam, and lift the 49% foreign equity cap for most companies listed on the stock exchanges.

The recent amendments to the Companies Act of Japan, which introduced, among other things, squeeze-out procedures, have been lauded as a boost to Japanese M&A practice.  Prior to the amendments, squeeze-outs in Japan were required to be conducted through the use of a certain class of shares, resulting in a complicated and time-consuming process.  The amendments, which came into effect on 1 May 2015, allow for a “special controlling shareholder” of a company (i.e., a shareholder that controls 90% or more of the company) to compulsorily acquire the shares of the remaining shareholders in the company for cash consideration.  The new squeeze-out procedure is expected to simplify and accelerate the squeeze-out process in Japan.

In 2013 Vietnam amended its Constitution; and now officially recognises that the private sector has an equal role in the economy as the public sector.  Many laws have been revised or restated to reflect this principle, most notably the LOI and the LOE.  Both laws will become effective from 1 July 2015, and decrees implementing those laws are underway.

As to the LOI, the most important change in the law is the definition of “foreign investor” or what is deemed to be a foreign investor, and the process of approving M&A transactions.  In the past, companies that held directly or indirectly more than 49% of total capital by foreign investors might be deemed foreign investors.  Now only enterprises held directly by foreign investors (F0) with at least 51% of the total capital, or held by company/ies (F1) where foreign investors directly hold at least 51% total capital are deemed to be foreign investors.  In other words, Japanese investors may establish a local holding company of various structures, to hold the majority of a Vietnamese operating company, whilst at the same time avoid being triggered by the conditions of investment that are applicable to foreign investors.  This “form over substance” approach of Vietnam is different from the “substance over form” approach that China utilises to control offshore held companies and offshore M&A transactions.

In the past, foreign investors have had to obtain an Investment Certificate (“IC”) – now referred to as an Investment Registration Certificate (“IRC”), and as a closing condition for an M&A transaction.  The new law stipulates that only registration at the company registrar (normally the local DPI) is required for foreign investors, or those deemed to be foreign investors.  The registrar will issue an approval for the M&A within 15 days from filing.  This reform is to catch up with China’s recent streamlining of the investment procedure.

As for the application process, Vietnam will introduce a national portal, in which information on the IRC application, as well as the conditions under which it can be made online.  Mega projects or projects using public land or natural resources shall have to obtain principle approval (“PA”) before applying for the IRC, meaning the application process can last from 30 days to 90 days.  Other projects however will be issued with the IC within 15 working days.  There are 29 areas that belong to a “restrictive list” of investment where internal approval from the relevant ministries should be sought, including distribution and logistics services, but those restrictions have been subject to criticism from investors and expected to be relaxed before 1 July 2015.  The IRC is now issued by a local industrial zones authority (“IZA”) or the department of planning and investment (DPI) instead of the People’s Committee, significantly reducing the time frame of IC issuance.  The DPI/IZA responsibilities are now only to review the documents, and not the due diligence of the investors.  It is expected that with straightforward conditions in the application dossier, the DPI shall refrain from asking relevant authorities before issuing the IC.

Meanwhile the MPI has issued Official Letter 4326 /BKHĐT-ĐTNN (OL 4326) for ad hoc guidance to implement the new LOI, as well as the forms to be used from 1 July 2015 to obtain the Investment Registration Certificate (IRC) and its amendments; they key points are:

i.) Online application for IRC: investors can file IRC application online at the National Investment Portal [NIP], and submit a paper dossier within 15 days from the online filing.  In the event that the dossier is accepted, the investors will be given a temporary account to check the application status.  Any incorrect or incomplete application must be notified within three days from receipt by the licensing authority.

ii.) Project Code: the project code is a 10 digit code to be issued to the applied project (Project) during its operation.

iii.) Forms issued: among the forms submitted, please noted that CPC Code and VSIC Code (for business line) is still required when submitting to obtain the IRC.  Separate forms are also available for amendments to the project.

iv.) M&A approval: the form for M&A approval is on form I.6 attached to OL 4326.  This form is simplified, and the explanation to satisfy conditions for M&A is rather brief and must strictly follow the WTO Commitment.  It is unclear how other restrictions under local laws could be satisfied or would need to be satisfied (e.g. ENT for distribution companies).

v.) Forms of decisions and IRCs: OL 4326 also provides new forms of IRCs, Principle Approvals and other decisions for authorities to use.

No noticeable regulatory changes occurred in the past few years in relation to M&A.  A number of tax measures, however, may have had a slight impact on the M&A market.  The Act of 29 March 2012 introduced a 25.75% capital gains tax on the sale of shares by a Belgian company if the shares are sold within one year from their acquisition.  The tax does not apply to physical persons selling shares.  In addition, as from 1 January 2013, a tax of 0.412 % is levied on capital gains resulting from share sales, even if the shares were held for more than one year.  These capital gains were previously entirely exempt.  The tax, however, only applies to large companies and not to small or medium-sized enterprises.

During the last years, there have been extensive regulatory changes and reforms in many fields, aiming mostly into creating a more competitive environment in Greece.  Indicatively, the new Investment Law aims to increase liquidity, speed up regulatory procedures for investment projects and ensure transparency; moreover, the laws that have transposed the UCITS/AIFM Directives have also introduced new investment tools in Greece.  In parallel, the new Civil Procedure Code and the introduction of mediation aims to a modernised and more effective dispute resolution mechanism.  Reforms take place continuously on many other fields of law, including, but not limited to, corporate, labour, fiscal etc.

There has been some significant progress with legislative reforms and initiatives in Ukraine.  However, we are yet to see how these reforms will be implemented in practice.
One of the recent developments is the requirement for all Ukrainian companies to disclose information regarding their ultimate beneficial owners.  The law defines ultimate beneficial owners as individuals who, irrespective of formal ownership of Ukrainian company, may influence the management and business activities of the company.  Information about UBOs is publicly available and may be easily accessed online.There are also important developments in the area of transfer pricing.  It has recently been clearly stated that transfer pricing rules do not apply to value added tax and transactions between related Ukrainian tax residents.

In 2014, there were approximately 190 Belgian M&A transactions (both domestic and cross-border).  This represents a slight increase compared to the period 2011-2013, with approximately 170 M&A deals per year.  Whereas in the first years after the 2008 economic and financial crisis, buyers were most often industrial players and private equity deals were hampered by a lack of available cash and the reluctance of financial institutions to provide funding, it appears that in the last 12 months the deal appetite of Belgian companies has somewhat increased and confidence in the private M&A market is starting to grow again.

Whereas auctions previously were quite rare (only half of the transactions with a value over €100m were auctions), currently three out of four such transactions are auctions.  There seems to be a positive correlation between transactional value and the use of auctions.

The top sectors where most private M&A deals are traditionally concluded are those of logistics, life sciences, technology/IT and food.  The most noticeable transaction of 2014-2015 was the acquisition by Perrigo of Omega Pharma, the Belgian leader in OTC cosmetics and pharmaceutical products, for $3.6 billion.

2015 has seen the return of the M&A “Mega” deal.  37 deals greater than $10bn in value have been announced so far this year.  Corporate buyers have finally been prepared to part with significant amounts of cash in order to consolidate their market positions and take advantage of growth opportunities.  All but one of the $10bn+ deals this year have been between two corporate entities.  Based on the location of the target company, North America and Western Europe remain the “powerhouse” regions for deal activity, but in the last 18 months the Far East & Asia Pacific region is getting much closer in terms of its companies being targeted for deals.

As mentioned above, the deal size has been larger, assuming the extensive due diligence and financing costs.

The overall deal size during 2014 amounted to approximately €5.1 bn.  Although there has been an increase in the overall volume, there has also been a significant decrease in the average deal size.  In terms of sectors, real estate has been leading the M&A transactions, followed by some announced privatisation deals like the privatisation of regional airports, which has, however, been put on hold.  Shipping and industry has been active as well.

We have personally witnessed a recent certain attractiveness of companies carrying on their business in the technology and digital sector.

We notice a strong interest from Japan and Korea, as well as Singapore, to invest in Vietnam.  According to Savills, M&A in real estates have gone up by US$7 billion this year.[1]  In retail sector, we have seen the landing of major players such as Aeon, Ministop, Family Mart, Guardian, Seven 7 and more through M&A.  In food, beverage and entertainment, we see the M&A from leading Japanese brands such as Saporo, Suntory, MOF; as well as many Korean brands, Lotte Cinema, CGV, Angel in Us, to name a few.  As Vietnam is among the countries that have “golden population”, which average ages between 25-30, and the middle class will grow by 40% until 2020, there will be many market opportunities for new comers that satisfy the demand of the new middle class, including healthcare, education, real estates, retail and entertainment.

The banking sector has seen a fair share of mergers and acquisitions in recent years, especially with the exit of a number of foreign banks whose Pakistan branches have been merged into Pakistani banks.

In terms of sectors, M&A activity in the medical and life-science sectors have seen an uptrend in recent years.  Due to Japan’s ageing society, which has resulted in increasing demand for health-related services, Japanese companies have over the years developed highly advanced medical and life-science technology.

The IT sector in Japan continues to hold tremendous promise as Japanese companies, from industry leaders to start-ups, are showing increasing interest in IT development.  This has resulted in a recent increase in M&A activity in the IT sector.

As regards deal size, mid-sized inbound M&A transactions have been quite common in recent years, especially deals involving private equity funds as acquirers.  The outbound activities of Japanese companies in recent years are focused mainly on targets in the Asian region, and typically involved mid to small-sized deals, with the exception of a few transactions of considerable size involving U.S. and European targets.

Large caps have strong balance sheets and are willing to make large transactions.  This includes transformational deals.  Key drivers of M&A are the acquisition of technology and closing of products gaps followed by the acquisition of market share.  Another important driver for mature, lower growth businesses is to acquire growth outside of the current core business.

It seems that the deal size somewhat increased over the last two years.  We have even seen interests in acquiring a controlling interest in listed or public companies, types of transactions that didn’t previously exist in Vietnam.  The most active sectors we have seen include real estate, retail, finance, energy, and consumer goods manufacturing.

The Luxembourg takeover bids law shall neither apply to takeover bids for securities issued by companies, the object of which is the collective investment of capital provided by the public, which operate on the principle of risk-spreading, nor to takeover bids for securities issued by the Member States’ central banks.

Such integration shall further require a deep due diligence process which would be complicated by confidentiality obligations of the target company.  Such integration of finance organisations shall also require a complete preparation from a regulatory perspective to ensure that all required obligations will be satisfied to avoid a “bad start” of the investor with the relevant supervision authorities.

Integration of finance organisations need to consider a range of issues from how to extend required financial controls to the newly acquired entity, how to keep talent in the finance organisation motivated despite increasing uncertainty and higher workloads during an integration.  It is important to ensure financial data flows are being maintained and there are also tax, treasury and legal considerations to be worked through as part of integration planning.

Along with promoting FDI, the government has pushed forward an equitisation program for state owned enterprises (SOEs), with an ambition to sell at least US$3.5 billion of assets in over 180 SOEs within this year.  The attractions of SOEs are the land they control, and due to their status, their market value has not had the opportunity to be fully realised.  Many SOEs are now on the list, including Vietnam Airlines, Vinatex (textile corporation), and the Saigon Beer Company.  In the past, the strategic partners must acquire shares at a discount through the IPO.  Now strategic partners may negotiate directly with the SOEs and their owners to an agreed price.  Moreover, newly equitised SOEs will be listed immediately after an IPO event, instantly providing further market-lead value appreciation opportunities for foreign investors.  It is also widely expected that the 49% ownership capacity for foreign investors with respect to listed and public companies will be relaxed.  The remaining issue will be to obtain transparent information from the Ministry of Finance and the State Capital Investment Corporation (SCIC) to participate in this process.[1] The equitisation process is an alternative approach to Vietnamese SOE’s compared to that of China, which has mainly focused on restructuring in the SOE management.

Following the relaxation of the foreign investment procedure under the new Law on Investment (LOI) and the Law on Enterprise (LOE), the Government has now also relaxed the room for portfolio foreign investment as well as the equitisation of state owned enterprise (SOEs).

Furthermore, the Decree provides for the equitisation of state owned enterprises (SOEs), and this action is expected to attract more share acquisition in stock markets as well as private equity soon.  Currently, a foreign investor may purchase up to 49% of total shares of public joint stock company (JSC) or a listed company.  From 1 September 2015, this general restriction will be removed under Decree 60/2015/NĐ-CP dated 26 June 2015 (Decree 60).

Instead, the new restriction will be subject to the WTO commitments or other specific domestic law (e.g., the 30% cap in the banking sector).  If there is a specific restriction under domestic law that has yet to be specified, then the rule of thumb is 49%.

When there is no restriction under domestic law (e.g., for production companies, or distribution companies), then there is no limit for the foreign shareholding ratio.  This rule also applies to equitised SOEs, with the aim of attracting more foreign investment in the privatisation program.
As for securities companies (or investment banking), those who are eligible to establish 100% foreign owned securities companies are allowed to buy up to 100% equity of local securities companies.  Those who are not eligible can acquire up to 51% total shares.

Decree 60 also lifts all restrictions to foreign investors to invest in bonds.  With respect to share certificates or derivative products of stocks of JSCs, the restriction will be relaxed as mentioned above.  For this purpose, open funds or securities funds that have foreign shareholding more than 51% equity will be deemed as foreign investors.

In addition, Decree 60 addresses the following changes:
i. Private placement of public companies
ii. Share swap of public companies
iii. Public offering of shares in public companies for swapping shares in non-public
companies, or equity in limited liability companies
iv. Private placement filing at the State Securities Commission (SSC) for public companies
v. Public offering process, use of escrow account for public offering proceeds
vi. Public offering of investment certificates or shares abroad
vii. Redeem shares
viii. Tender offers
ix. Sale of treasury shares
x. Listing of merged or amalgamated companies
xi. Upcom transaction registration and listing
xii. Real estate capital valuation and contribution to real estate investment fund

Banks in Pakistan are regulated by the State Bank of Pakistan.  The legislation governing banks includes the Banking Companies Ordinance and the Prudential Regulations issued from time to time by the State Bank of Pakistan.  The key points in transactions involving banks is that the prior approval of the State Bank of Pakistan is required for any proposed acquisition.  Further prior approval of the State Bank of Pakistan must be sought and obtained before prospective acquirers can conduct due diligence on a bank.

In respect of amalgamation, under the provisions of the banking legislation in Pakistan, a scheme setting out transfer arrangements is required to be put in place and approved by resolutions passed by the shareholders of the merging entities (a majority in number representing two thirds in value) respectively.  The scheme, once approved, is required to be submitted to the State Bank of Pakistan for sanction.

A recent hot topic has been the consolidation of regional banks in Japan.  Financial policymakers seem to hold the view that there are too many regional banks in Japan.  Accordingly, some market watchers expect to see a number of Japanese regional banks being consolidated between themselves or with bigger financial groups in Japan, or being acquired by foreign financial institutions in the coming years.  One of the key issues in this regard is how effectively the operational systems of the acquirer and the target company can be effectively integrated.  Since many Japanese regional banks have their own major operational systems, integration of the regional banking system with different operational systems may prove costly and time-consuming.  In addition, depending on the market share of the relevant regional bank, certain anti-trust regulations may also be triggered.

Transitioning IT software and systems is a key issue especially when there is only a segment of a conglomerate being acquired.

While opening the door to, and creating more options for foreign portfolio investment, the deregulation of various procedures at SSC are certainly attractive to foreign investors, it is unclear how other restrictions under different ministries, such as Ministry of Health, Ministry of Education, Ministry of Industry and Trade may impact on the intention of the Government to open up the market.

Note that Art 74.3 LOI allows for the “non-compliant” restriction of business to be valid until 1 July 2016, suggesting there could be some more grounds of clarification and explanation to come.

Very often, the financing in an M&A transaction is assured partly by an external bank financing which is implemented afterwards closing.

The client very often sees the implementation of such bank financing as a straight forward post-closing transaction.  Actually, the lenders shall always notably require a full package of security documents guaranteeing their loans.  The implication of lawyers for the lenders and of lawyers for the borrower often renders the process difficult.

Hence we always recommend the client set up a clear term sheet with the lenders from the early stages of the M&A transaction and to clearly present to the lenders the structure and envisaged business to ensure a smooth process of the bank financing in due time.

Finance executives should consider three categories of integration risks.  Firstly, there are risks that the integration negatively impacts daily business.  For example, if the finance systems integration is not executed properly, it impacts the quality of the financial information available.  Secondly, there are often risks that the integration is not delivering the promised deal value.  Finance executives are often accountable for achieving the synergy target and it falls to the finance function to track synergies.  The third area of risk is that integration decisions have negative financial consequences.  For example for many companies with a European principal structure, moving headcount incorrectly may have substantial tax implications.

See response to question 4.

A perfect knowledge of the target company is probably the most important point in our view to be considered.  The performance of a due diligence process is very important not only in determining the value for the target company and hence of the purchase price for the latter, but also to identify any potential issues that may arise in the integration.

When certain issues are identified at the stage of the due diligence, this allows the parties to discuss them at an early stage of the negotiations and then to allocate the risks between the parties accordingly, mainly through an adjustment of the purchase price, an extension of the warranty, indemnity protection, escrow arrangements or otherwise.

A common mistake made by parties to a transaction is to sign a letter of intent without duly consulting their legal counsel.  As a result, letters of intent are often not sufficiently binding (from a seller’s perspective) or too detailed and binding (from the buyer’s perspective).  Parties also tend to forget to establish a clear framework for the negotiations, in which certain important elements are already agreed upon (e.g. price adjustment mechanisms, earn out, data room disclosure, etc.).  These elements are often very important to the parties, and if they are not dealt with at the start of the transaction, they may become deal breakers.

In addition, parties sometimes tend to underestimate the time and resources that are required to successfully complete a transaction.  This translates into incomplete data rooms, insufficient manpower to follow up on the Q&A process or lack of appropriate legal and financial counsel.

Deloitte’s research shows that the majority of merger failures are due to poorly executed integrations.  The reasons for failed mergers are 70% due to integration errors and only 30% due to transaction errors.  Common integration errors are, for example, lack of executive alignment on merger rationale, inadequate integration planning, merger synergies not being driven through quickly enough, lack of a formal and fast decision making process and too much time spent on organisational politics.  Other key mistakes are a loss of focus on everyday operations and that customers are forgotten.  On the transaction side errors include inadequate due diligence, weak analysis of the target and lack of strategic, financial or cultural fit.

There is a recent trend among many Japanese companies to set up M&A budgets of a certain amount and to allocate specific resources for M&A purposes.  Some Japanese companies tend to think that full utilisation of their M&A budgets is encouraged.  Accordingly, such “trigger-happy” companies may face the risk of acquiring unsuitable targets or paying for targets that are excessively valued.

Another common mistake that Japanese buyers sometimes make in an acquisition is failure to adequately protect themselves through appropriate representations/warranties and indemnity clauses based on key findings in due diligence reviews of target companies.

Key risk area’s in M&A is the integration of finance and G&A, also trending out projections when new management is coming on board.

M&A deals are considered by many observers and potential participants to be exciting and to bring rich rewards to those involved.  The reality is that many deals do not ultimately provide an increased level of shareholder value.  This is consistently linked to the following factors:

– The reality being that often the perceived synergies between the buyer and the target are not as great as initially thought
– The buyer has ended up paying more for the target than the value of the synergies the target brings to the buyer
– The deal itself can become a major distraction to both parties and take far longer to conclude than originally envisaged.
– Post deal integration of the target is more problematic or fails to happen.

As Vietnam’s increasingly outward looking economy and Competition Law develop, the country’s merger control regulations should not be overlooked – not least because of the hefty penalties that they attract.  A fine of up to 10%of a company’s total revenue in a financial year may be imposed for a breach of merger controls, including requirements on notification.  Other severe penalties include forced demerger or withdrawal of a company’s business certificate.

It is also worth remembering that investors who have just completed transactions are not out of the woods yet.  Competition authorities can still penalise companies up to two years from the date of the breach and prospective or existing investors must be aware of how these merger controls affect them and how to deal with potential non-compliance risks.

The term, “economic concentrations”, under the Competition Law includes company mergers, consolidations and acquisitions, as well creations of joint ventures.  The law imposes certain merger controls on these economic concentrations that investors should be aware of, especially when dealing with larger transactions.

These merger controls focus on the consideration of the economic concentration’s “combined market share”.  The market share of a company is calculated by referencing its percentage of turnover from sales or inwards purchases against total turnover from sales or inwards purchases by all companies in the business of the same type of goods in the relevant market for a month, quarter or year.  The combined market share is defined as the total market share in relevant markets of all companies participating in an economic concentration.  The job of looking at the extent of the combined market share falls to the Vietnam Competition Authority (VCA) when assessing whether an economic concentration will be subject to notification or prohibition under the Competition Law.

This makes it crucial for investors, before entering into an economic concentration, to calculate the resulting combined market share to evaluate potential risks of offending Vietnam’s merger control regime.  This prudence will allow investors to determine whether VCA notification of the transaction is required.

The data necessary to determine market share can be obtained from government agencies, such as the General Statistics Office, the ministries of Finance and Information and Communications or the State Bank, depending on the respective industry.  Reputable market research can also be used.

To prevent an under or overstatement of this market share figure, investors also need to identify the “relevant market”, because market share will be calculated on an assessment of the relevant product market and geographical area.  For example, the market share of a company may be more than 95% for the Ho Chi Minh City area, but only 5% for the whole country.

With respect to notification requirements, there are generally no restrictions against an economic concentration if the resulting combined market share in the relevant market will be below 30%, or if the resulting economic concentration is considered a small or medium-sized enterprise (SME).

If the combined market share falls between 30-50%, the VCA must be notified of the proposed transaction before the parties can execute it.  The parties can only proceed with the transaction once the VCA approves it.

Economic concentrations that result in a combined market share of more than 50% will be prohibited, unless the VCA grants an exemption.  Such an exemption can be granted if one or more companies in the economic concentration will be at risk of dissolution or bankruptcy or if the economic concentration will contribute to the country’s socio-economic development or technical and technological progress.  However, these exemptions are not guaranteed and will be at the authorities’ discretion.

The key risk areas are as follows:

– inadequate due diligence by the buyer and, as a result, acquisitions of unwanted liabilities the buyer did not know about;
– relying on warranties/indemnities provided by an offshore company with no substance which acts as a seller.  In this case these must be supplemented by a parent company guarantee or other adequate security;
– inadequate disclosure of information by the seller which results in a potential liability due to warranty/indemnity claims.  Sellers often start working on preparing a disclosure schedule at the very end of the negotiation process.  In addition, any delay with preparing a disclosure schedule can hold up or even frustrate the deal if the potential buyer sees the issues it was completely unaware of;
– inadequate representation of the parties.  In an attempt to save of legal fees, Ukrainian business owners often prefer to use their existing in-house lawyers in order to negotiate a cross-border M&A deal.  This may complicate and delay the process due to unfamiliarity of in-house lawyers with the concepts used in Western style transaction documents.

When a foreign investor acquires a local company, there can be a gap in deal expectations, culture, management practice and negotiation style, amongst others.  Managing such a gap is critical to the success of a deal.  Sorting out how to deal with a legal due diligence is also key as foreign investors will need to be advised what findings, while not satisfactory, are relatively common in the local market and how to handle such findings.

From the legal advisor’s perspective the key issue during an M&A transaction is to keep the balance between identifying and handling legal risks and assisting in making the transaction.  From the principals’ point of view, the risks differentiate, depending on the side: the Buyer faces the risk of acquiring an asset which has regulatory limitations, as well as, encumbrances and present or potential liabilities – in addition the tax structure must be carefully selected.  The Seller’s risk involves securing payment (either paid upon completion or deferred one) and giving too many reps & warranties.  Both sides also face the commercial risk of the price (paying too much versus not getting paid enough for the asset sold).  A common counterparties mistake is not to have clearly agreed their commercial understanding – this complicates negotiations – after all the devil is in the details!

Switzerland is ranked as one of the countries with the lowest level of corruption in the Corruption Perception Index as published by Transparency International.  Between 2000 and 2006 anti-corruption laws were tightened in Switzerland.  New is, among other things that the bribery of foreign public officials is now regarded as a criminal offence and that not only individuals, but also companies can be prosecuted for corruption.  Typically, most enforcement actions in Switzerland stem from the US DoJ in those instances where government officials were bribed.  This has been the case in a number of recent high profile cases involving some well-known companies.  Recently the Swiss Attorney General initiated a corruption investigation of FIFA.  This could indicate a tougher enforcement regime.

Ukrainian anti-corruption legislation has improved significantly over the last year.  A series of laws and regulations were adopted in addition to the core law “On Fundamentals of Preventing and Combating Corruption”.  There are also specific provisions on the topic in the Criminal Code and the Code of Administrative Offences.  Amended legislation provides for increased sanctions – for example, taking a bribe may be punished with imprisonment of up to 12 years and confiscation of property.

Also, the new government body was established – National Anti-Corruption Bureau of Ukraine.  It is a law enforcement agency with broad authority, which is responsible for fighting corruption in Ukraine.

Vietnam’s anti-corruption legislation applies to persons defined as “public officials” or “persons with position, power.” The current threshold for establishing a criminal bribe is VND 2 million (approximately USD92) when the payment of cash or other material benefit is received or paid to induce the recipient to do or not to do something for the benefit of the payor in connection to the recipient’s official duties.  Enforcement in practice tends to focus on large-value, high profile corruption cases.

The law on anti-corruption is in place since 2001.  The Criminal Code also has the crime of corruption and bribery.  A bribe is considered as an action to take benefits in exchange for exercising power.  This law has been enforced strongly in some areas but less so in other areas.  The two areas that face corruption issues are the judicial and the police system.  In other areas, corruption is rare.

The main anti-corruption legislation in Japan is the Unfair Competition Prevention Act (Act No. 47 of 1993, as amended; the “UCPA”).  Bribery of foreign public officials is criminally punishable under the UCPA.  Violators may be imprisoned for up to five years or fined up to JPY5 million (article 21, paragraph 2 of the UCPA).  Bribery of domestic public officials is criminally punishable under the Penal Code (Act No. 45 of 1907, as amended; the “Penal Code”).  Foreign companies can be prosecuted for foreign bribery because the UCPA does not differentiate between domestic companies and foreign companies.  Based on the Penal Code of Japan, a crime committed in Japan should be punishable.  For this purpose, a crime will generally be deemed to have been committed in Japan if all or part of the relevant act was conducted in Japan or all or part of the consequences of the crime occurred in Japan.

Recent anti-corruption legislative changes provide severe penalties in case of bribery of any governmental, parliament, regional or municipality official (imprisonment for a period of 5-20 years and monetary penalty between €15,000 – €150,000).  Public employee bribery penalties differ (imprisonment for a period of 1-5 years and monetary penalty between €5,000 – €50,000) and in case of repeated acts, or bribes of significant value, the penalty is more strict (imprisonment for a period of 5-15 years and monetary penalty between €15,000 – €150,000).  Although the above changes are recent, monitoring and preventing corruption is a key issue.

Pakistan Penal Code 1860 (PPC 1860) is a general penal code, which prescribes offences and punishments for such offences, and extends to the whole of Pakistan and applies to any offence committed by any citizen of Pakistan or any person in the service of Pakistan and outside Pakistan (public servant as defined therein) and any person on any ship or aircraft registered in Pakistan.

Prevention of Corruption Act 1947 (PCA) which is an Act to more effectively prevent bribery and corruption.  It extends to the whole of Pakistan and applies to all citizens of Pakistan and persons in the service of the Government, wherever they may be.  Under the PCA the expression “public servant” is as defined in section 21 of the PPC 1860 and includes an employee of any corporation or other body or organisation set up, controlled or administered by or under the authority of the Federal Government.

The Government Servants (Conduct) Rules 1964 under which a government servant is prohibited from accepting (without the prior permission of the government) any gift the receipt of which will place him under any form of official obligation to the donor.  If however due to exceptional circumstances such gift cannot be refused, the government servant may accept such gift and inform the Cabinet Division accordingly.  The gift must then be kept for official use by the department or organisation.  A government servant cannot, except with the previous sanction of the government, engage in any trade or undertake any employment or work, other than his official duties.

National Accountability Ordinance 1999 (NAB Ordinance) relates to the prevention of corrupt practices, misuse or abuse of power or authority, misappropriation of property, taking of kickbacks, commissions and for matters connected and ancillary or incidental thereto.  The NAB Ordinance is applicable to persons who are or have been in the service of Pakistan and to any “holder of public office” as defined under the NAB Ordinance, wherever they may be.  The NAB Ordinance also deals with and provides for penalties for offering or paying bribes or making facilitation payments to employees of private or public listed companies.  Under the NAB Ordinance the term ‘person’ includes in the case of a company or corporate body, the sponsors, chairman, chief executive, managing director, elected directors, by whatever name called, and guarantors of the company or corporate body, or anyone exercising direction or control of the affairs of such company or corporate body, and in the case of any firm, partnership or sole proprietorship the partners, proprietor or any person having interest in the said firm, partnership or proprietorship concern or direction or control thereof.  The penalties under the NAB Ordinance include rigorous imprisonment for a term which may extend to 14 years and fine.  The amount of fine shall in no case be less than the gain derived by the accused.

Civil Servants Act 1973 provides for the appointment of persons to, and conditions of persons in, the service of Pakistan and is applicable to all civil servants wherever they may be.

Under the Government Servants (Efficiency and Discipline) Rules, 1973 “misconduct” is defined as conduct prejudicial to good order or service discipline or contrary to Government Servants (Conduct) Rules, 1964 or unbecoming of an officer and includes any act on the part of a Government servant to bring for attempt to bring political or other outside influence directly or indirectly to bear on the Government or any Government officer in respect of any matter relating to the appointment, promotion, transfer, punishment, retirement or other conditions of service of a Government servant.  A government servant may be penalised by demotion or withholding for a specific period promotion or increment or by recovery from pay of the Government servant of the whole or any part of any pecuniary loss caused to Government by negligence or breach of orders or compulsory retirement or removal/dismissal from service.

Federal Investigation Agency Act 1974 (FIA Act) is applicable to all citizens of Pakistan and public servants, wherever they may be.  A public servant under the FIA Act is as defined in Section 21 of the PPC 1860, and includes an employee of any corporation or other body or organization set up controlled or administered by or under the authority of the Federal Government.  The FIA Act makes references to other anti-corruption legislations (wherein punishments and penalties for corrupt practices are provided for) and does not specifically provide for punishment and penalty in the case of corrupt practices.

In the context of takeover bids, the Luxembourg law provides the general rules and principles applicable with respect to a takeover bid and aims at ensuring an adequate level of protection for the holders of securities.  As a general principle, the law provides that all holders of the securities of an offeree company of the same class shall be afforded equivalent treatment.  In that respect, the offer document shall include certain mandatory mentions including notably in case of mandatory bid the method employed for determining the consideration.  Shares may be bought outside of the takeover bid process, but subject to certain notification obligations that are imposed notably by the applicable transparency regulations and the Luxembourg squeeze-out law.

General anti-corruption legal provisions shall also remain applicable.  Criminal and civil liabilities shall be applicable on such matters.

Of the Top 50 deals by value that have been announced in H1 2015, 29 are effectively “horizontal mergers”.  This figure remains the same as H1 2014, but represents a 52% increase on those announced in H1 2013.

Therefore it is understandable that regulators in particular countries may have concerns that consumer choice may become more limited as a result of such deals and would thereby enable the newly enlarged entity to potentially abuse its position in terms of pricing of goods and services offered.

Taken at face value such deals should theoretically enable larger companies to maximise their economies of scale.  Whilst regulators are right to scrutinise such deals, in order to protect the consumers, careful thought should be applied to those that are allowed and those that are rejected.

Anti-trust concern in Vietnam is plausible, but Competition Law is not very active so far.  While it is cautious to make an anti-trust notice to the Competition Administration of Vietnam (CAV).

We indeed acknowledge certain concerns in this respect though as regards the Luxembourg jurisdiction, applicable legal provisions notably stemming from the EU should avoid such monopolies.

There is increased scrutiny by Boards on whether or not management achieves the promised synergies.  Many recent Swiss deals are focused on growth synergies rather than cost synergies.  Where cost synergies are important, there is heightened awareness of the need for thorough synergy planning and tracking.  Similarly strong risk management processes are being adopted to identify and mitigate key integration risks.

An interesting example of M&A about risk reduction and cost synergy is in the retail sector.  The restriction of foreigners to participate in retail sector was removed in 2009.  However, foreigners are still keen to find and work with a local partner.  This is rather the knowledge of the local market that needs to be explored and worked by cooperation.  On the course of cooperation, difference in vision and culture may negatively impact on the risk reduction and cost synergy.  Eventually however, if both parties respect each other, these difficulties can be overcome.

We would raise in this respect that cross-border mergers inside the EU have been largely facilitated by European Regulation and Directive allowing a reconciliation of multi-jurisdictional legal environments.  Such regulations have created a unified legal framework ensuring a cross-border universal transfer of the assets of the merged company and the implementation of the merger according to common principles with the EU Member States.  This ascertained the mergers within the EU and rendered them less costly.

As a result of the economic crisis, potential buyers tend to start with a high-level due diligence to ascertain whether the target meets the acquisition requirements and to reduce the initial costs.  If the results of the high-level due diligence are satisfactory, a more extensive confirmatory due diligence is conducted.

Whereas financial experts used to look at the past track record of a company to determine its value and decide whether or not to proceed with the transaction, most buyers are interested in the future potential of the target and the synergies that can be created following the acquisition.  This results often in a more thorough due diligence, that does not only focus on financial and legal aspects, but also on the business, HR and ICT of the company.  Although this is a more expensive and time-consuming effort, it allows the potential buyer to get a clear and realistic view of potential synergies and make an early start with the post-acquisition integration process.

With respect to technology/intellectual property, the first thing to focus is whether the trademark or patents are properly registered and still valid, whether any license has been registered with the National Office of Intellectual Property.  Furthermore, it is necessary to see if the royalty under each license agreement is under arm’s length price, as the current regulation on anti-transfer pricing is now on the rise.

One of the noticeable trends is an increased focus of potential buyers on data privacy compliance, in particular in the technology sector.  As more and more technologies involve the collection, processing and use of (large amounts of) personal data, it is important to carry out a thorough and detailed due diligence of the target’s data processing practices (data flows, purposes of processing and use, access to data, cross-border transfers, privacy policies, information practices, security measures, etc.).  In relation to intellectual property, the use of open source or third party software in technology of the target should be subject to careful analysis, in order to avoid any third party claims.

Due diligence in relation to technology/IP issues requires particular thoroughness and accuracy.  Special attention should be paid to the documents confirming seller’s ownership of technology/IP and previous underlying documents for IP rights acquisition.  It may be also necessary to carry out the analysis of legal risks related to the use of copyright works or industrial property as these rights have complicated nature.  A properly conducted due diligence will help to determine possible risks and commercial value of the transaction in order to avoid acquisition of worthless technology/IP.

In addition, this will help to avoid a situation where, after acquiring shares of a Ukrainian financial institution operating under a well-known name, a foreign buyer discovered that the name of that institution was registered as a trademark and was still owned by the previous shareholder – this situation illustrates very well the need for a detailed and highly professional due diligence.

Due diligence should be a systematic and integral part of any M&A transaction.  It is especially important when looking at a target company that has patents or intellectual property that is behind the buyer’s core motivation for doing the deal.  Key areas that should be ascertained in relation to the IP at a very early stage in the Due diligence include;

Ownership – does the target actually own the technology / IP it purports to own?

Limitations of use – are there any pre-existing agreements that prevent the use of the company’s IP in other markets or business areas?

Infringement claims – are there any outstanding or pending claims that might bring rise to a law suit?

IT due diligence can incorporate many different areas of focus, however these options should be narrowed during the scoping phase to ensure that the due diligence effort is relevant to the deal context and delivers most benefit for the deal value and business model.  Questions for diligence to address can be grouped into three areas:

– Confirming if IT contains risks to the current cost base and whether it can support the planned business model
– Identifying opportunities to improve IT performance and reduce IT and business operational costs
– Confirming the need and impact of data migration

In our view, though there is no particular impediment for a hostile bid in Luxembourg, we always recommend the bidder to co-operate with the management board of the target company, to authorise a smooth and complete due diligence process.

Review of licensing issues typically form an important part of legal due diligence.  Specifically, the identities of licensor and licensee, royalty amount and conditions of license (such as the conditions under which a license may be terminated) are key issues.  Where a license has been granted to the target company by its parent (which is often the seller) or affiliate, it is also important to determine how such license will be treated after the target is acquired.  Issues relating to cross licenses should also be carefully considered.  In particular, buyers should look into whether the target company will still be legally entitled to the benefit of material cross licenses once they exit the seller group.

Additionally, a buyer should make sure to review joint research agreements entered into between the target and third parties to determine the target’s right in respect of research results.

Further, due diligence should focus on whether the target has had disputes with its employees or former employees in relation to such employees’ inventions created in the course of the employees’ work (Shokumu-Hatsumei).  Under the Patent Act of Japan (Act No. 121 of April 1959, as amended), such an invention belongs to the relevant employee, and can only be transferred to the employer based on an agreement between them, under which the employer pays an appropriate amount of compensation to the employee for the invention.

Dilution EPS in acquisition can occurred because of the following factors:

i.         Related party transaction: if a subsidiary of a shareholder being supplier to the company, and charge excessively high fee, there is a risk that benefit from the company has been retrieved by the related party subsidiary.
ii.       Unprofitable assets: some assets cost a lot of funds to support and maintained.
iii.      Potential liability, especially tax liability.

The dilution or accretion of a buyer’s EPS as a result of an acquisition is one way in which the buyer can define the potential risk / rewards to its shareholders for pursuing the acquisition.  Logically it might well be argued that if a dilution of the buyers EPS is going to happen as a result of the deal then the deal should not proceed, but this should not be the only measure upon which the acquisition strategy should be determined.  EPS should be looked at in the “round” when considering the long term strategic benefits of the deal for the purchaser.

Dilution of the buyers EPS could occur as a result of the target company in the deal having negative net incomes or a higher PE ratio than the acquiring company.  How the acquiror chooses to finance the deal could also impact negatively on its EPS.  So if, for example, it were to finance the deal by bringing in new debt or by raising its existing debt levels then higher interest expenses would be reflected in the profits of the combined entity.  If the acquiror were to satisfy the deal using its own cash reserves, this too could impact profits as lower levels of interest would be generated.  Also if the perceived synergies between the two companies could not be achieved, this would impact upon the EPS in the longer term.

The acquisition costs and applicable taxes are mainly the factors that could lead to a dilution EPS.  This shall be controlled through a complete preparation of the transaction and a complete due diligence of the target company.

A common issue is that of “gun-jumping,” – such as when the potential buyer and target exchange competitively-sensitive information such as pricing or product plans, customer information and the like before completion of the transaction – which could trigger certain anti-trust regulations.  One way to avoid such risks is to refrain from any exchange of sensitive information at least until the clearance of merger filing.  An additional way to address gun-jumping concerns is the setting up of “clean rooms” to store competitively-sensitive and ensuring that such information is handled only by personnel who are not part of the transacting parties’ business teams.

Marketing and sales should be predetermined along with an iron clad plan for the transition, many times on an acquisition the acquired companies marketing department would be eliminated.

Competitors can take advantage of the uncertainty an M&A transaction brings, which may lead to loss of customers.  This risk can be mitigated by clearly communicating the deal rationale and integration roadmap from a customer perspective.  Identifying key personnel and putting a retention plan into action will mitigate the loss of talent.  Distributors may delay ordering anticipating a distributor rationalisation.  Again a clear communication plan will alleviate this risk.  Another risk to be addressed as a priority is customer facing staff not giving the right message or inconsistent messages to customers.  Customer facing staff needs to be informed and provided with detailed guidance for what they can and can’t say to customers.  Many deals are built on significant growth synergies; however adjusting incentive schemes, systems integration and back office consolidation may be required and can impact timelines of achieving revenue synergies.

During the M&A transactions, the seller is bound by an exclusivity period until the Share Purchase Agreement is signed by the parties.  Moreover the parties are bound by confidentiality agreement and therefore leakage of information that may impact the marketing and sale of shares may be minimised.  From the time the Share Purchase Agreement was signed until the completion of the conditions precedent stated in the Share Purchase Agreement.

There will most likely be continued high level of M&A activity for a little while longer.  Companies having undergone transformational deals will however need to pause and digest what has been acquired.  They may well conduct smaller acquisitions but are less likely to engage in further transformational ones.  Another trend that is likely to continue is the heightened focus on proper integration.  I have seen a great interest by corporates in building and upskilling their teams’ integration capabilities.  It is good news for the success of a deal if integration efforts are taken more seriously.

We expect the M&A activities level to increase significantly once (a) there is more certainty regarding the conflict in the Eastern part of Ukraine and (b) Ukrainian government negotiates a deal with its creditors.  Obviously there are other important factors such as structural reforms moving ahead, evidence of success in fighting corruption, etc.

Most economists agree that Ukrainian assets are currently significantly undervalued, and this is likely to result in a mini M&A boom once the fundamental risks stated above are addressed.

Referring to the reconciliation of the legal environments within the EU, such a reconciliation at the level of the world would render the M&A deals more attractive and less frightening in our view, especially for “non-big” companies.

M&A activities and direct investment will very likely increase significantly in Vietnam, especially after the sub-law regulations implementing the new investment law, enterprise law and real estate business law have been fully issued and AEC integration takes shape.  From 2016, corporate and investment procedures are anticipated to be drastically simplified and the difference in the treatment of foreign investors and local investors to be significantly reduced.  Nevertheless, the approval requirements and procedures for sizable investment projects in infrastructure, real estate and energy probably will remain complex and burdensome.  Many of our clients wish that the Government would take more aggressive steps to simplify the procedures for those sizable projects.

The Japanese government has in recent years introduced several policies targeted at developing a start-up culture in Japan, in hopes of encouraging innovation.  Additionally, the government is also expected to roll out more policy initiatives to encourage big companies to move to, as well as encourage the establishment of start-ups in, the regional areas of Japan.  Hopefully, this will result in more M&A activities involving regional companies in the near future.

In addition, Stewardship and Corporate Governance Codes were recently introduced in Japan, to encourage more communication between Japanese companies and their shareholders, and more responsibility taken by Japanese companies toward shareholders.  Some high-profile hostile takeovers in Japan about a decade ago had led to the institution of takeover defence mechanisms by many Japanese companies, and engendered wariness toward foreign shareholders.  The introduction of the Stewardship and Corporate Governance Codes in Japan have gone some way in dispelling unwarranted scepticism that some Japanese companies held toward foreign shareholders, and hopefully, this trend will continue.

I believe the financing arena will change along with the characterisation of the deal due to anticipated interest rate volatility.

Despite the ongoing Greek debt saga and the revision of global growth forecasts, the appetite for M&A deals remains strong and appears to be unsated at this time.  Corporate buyers have shown increased levels of activity over the last 12 months, reflecting the need for them to increase shareholder value.  Whilst Private Equity buyers have been active compared to previous years it is common knowledge that the industry as a whole is sitting on a reported $1.3trillion of “Dry Powder” which has to be invested.  This inevitably means that deal values are rising as there is strong competition for the best performing companies from both corporate and private equity buyers.  Add in to this mix the rise of secondaries by private equity firms and it’s no surprise to find that the average value of globally announced deals per month in the first seven months of 2015 is greater than the average monthly value seen in 2007.  On this basis 2015 could end up being a record year for announced global M&A deals.

I strongly believe that, upon stabilisation of the political situation, right after the elections to be held on 20 September, Greece will enter into a new era, full of opportunities.  I expect that investors will start to monitor more actively potential acquisition targets, and once they feel that Greece offers again a stable and effective business environment, there will be a boost in the M&A activities in comparison to the previous months.  In order for this to happen, all Greek market players (institutional or not) should put their best effort so that an attractive and competitive business environment is created and sustained.

We hope M&A in “conditional projects” to be removed.  There are more than 250 business areas where the M&A are subject to approval from relevant ministries.  The LOI stated that any restriction to business must be presented in the National Portal of Foreign Investment or otherwise rendered invalid.  However, please note that Art 74.3 LOI allows for the “non-compliant” restriction of business to be valid until 1 July 2016, suggesting there could be some more grounds of clarification and explanation to come.