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Geoffrey P Burgess, corporate Partner at Debevoise & Plimpton’s London office, is part of the firm’s India practice. In this interview with Bar & Bench’s Anuj Agrawal, he talks about the changing M&A landscape, the Soviet Union, Indian law firms, and much more.
Anuj Agrawal: How has cross-border M&A shaped up post the fall of Lehman Brothers?
Geoffrey P Burgess: One of the biggest shifts since Lehman has been in mentality. Prior to Lehman, you could sense a creeping assumption that growth was here to stay; now, the truth of cyclicality is very much accepted.
A lot else has happened since the fall of Lehman though, and we’ve seen a number of wider developments drive M&A trends. Flagging growth in China and the attendant continued fluctuations in commodity prices are big ones, as is the growth of cash reserves for funds and strategic buyers. Events in Russia and the Middle East have also caught many by surprise and stalled growth in certain markets. All of this up and down has kept rates very low, which powers M&A and balance sheets generally.
As a consequence, you see much more push and pull on terms, and a willingness from private equity buyers to look at more complex or smaller deals where they may spot better value for their investment. You also see continued high prices for strong assets.
Anuj Agrawal: What is the next big sector or market for cross-border M&A?
Geoffrey P Burgess: If I had a reliable answer for that, I’m in the wrong business! Carve-outs resulting from some of this year’s blockbuster deals may be interesting to look out for in 2016. The insurance sector is seeing a lot of innovative thinking when it comes to cross-border M&A, as is the pharmaceutical sector, so those would also be useful to keep an eye on.
Anuj Agrawal: Do you think the Indian aviation space, specifically the LCC sector, could do with a bit of regulatory encouragement?
Geoffrey P Burgess: The regulatory picture is only one side of the equation. Perhaps a more critical constraint at the moment is infrastructure. Airlines are making plans to grow in the country, but it has to go hand in hand with a commitment to creating infrastructure able to cope with that growth.
That, for me, seems the biggest key to unlocking growth in aviation in India. The interest from international carriers creating JV’s in India is another potential trend.
Anuj Agrawal: What are some of the notable differences observed in cross-border deals in India/with Indian companies as compared to those in Europe or the U.S.?
Geoffrey P Burgess: Three areas stand out for me. The first is the perpetual issue of the tax environment, about which thousands of articles have been written. Second – the restrictions around foreign investment, which is obviously a much bigger factor in India than it is in Europe or the U.S. And third is legal risk and uncertainty. These are areas of notable difference when you compare the country to Europe or the U.S., or even to other emerging markets.
Anuj Agrawal: Are you concerned about enforceability of M&A contracts, and arbitral awards in India?
Geoffrey P Burgess: For purchase agreements, not so much.
But continuing relationships in shareholders’ agreements and the like give people great pause. This is particularly true where aspects of a deal fall outside commercial law and drift towards corporate law. It’s certainly a factor for investors in India to consider when going through a deal.
On arbitral awards, the moves to establish an institutional model of arbitration in India by way of the Arbitration and Conciliation (Amendment) Ordinance, 2015 in October were a major step forward. The hope is that this will help ensure a balance between judicial intervention and judicial restraint in arbitration matters, as well as protecting the neutrality of arbitrators, which will have an obvious knock-on effect on the enforceability of arbitral awards.
Anuj Agrawal: Do you think the growth of start-ups in India is going to lead to increased M&A in the long run?
Geoffrey P Burgess: I think that’s one of the major attractive characteristics of the Indian economy. There’s a huge entrepreneurial culture; one which doesn’t necessarily exist in other emerging markets. That will clearly drive business growth, and with it, the opportunities to do deals. That’s as true for domestic consolidation as it is for foreign investment.
There’s a huge entrepreneurial culture; one which doesn’t necessarily exist in other emerging markets.
Anuj Agrawal: Can you tell us a bit about Debevoise’s short term and long term plans for India?
Geoffrey P Burgess: Debevoise has advised on India related matters for 25 years. We have strength on both the corporate and disputes sides of the coin, and have long standing relationships with some of the top domestic firms, as well as senior figures within the Indian legal community. Our team is drawn primarily from the firm’s London, Hong Kong, and New York offices and is made up of lawyers who have deep experience in the country.
In that context, it’s perhaps no surprise that we plan to continue working with both international and domestic clients in India, growing the practice as the country continues its emergence onto the international stage. It’s a market which continues to develop, and one we remain very much committed to.
Anuj Agrawal: Have you observed an increase in global interest in the Indian insurance space following the release of the IRDA guidelines?
Geoffrey P Burgess: The short answer is yes. They’ve given a great deal more clarity to the market, and from an outside-looking-in perspective, it’s given investors both greater confidence on the market’s stability as well as allowed them to more clearly see the opportunities available.
Anuj Agrawal: What are your impressions of Indian law firms, and Indian lawyers?
Geoffrey P Burgess: The first deal I did in India was in Chennai over ten years ago. At the time, I was very impressed with the quality of the local lawyers we dealt with, and that impression has only grown in the last decade. India is home to a lot of highly talented lawyers.
Anuj Agrawal: Do you see a consolidation of the Indian legal industry, or do you think there is enough space for niche practices?
Geoffrey P Burgess: From my perspective, there’s plenty of space for a full range of practices in India. Whichever country you look at, the legal market is a relatively fragmented one, with space and need for a number of different approaches, from the everything-to-everyone mega-practice, to the specialists serving specific markets. India is no different.
Anuj Agrawal: Do you think foreign law firms will be allowed to enter India within the next twelve months?
Geoffrey P Burgess: That’s obviously an on-going debate, which anyone would find tough to make any concrete predictions for. Perhaps more important is whether I feel it’d be a useful development or not. Any market thrives with competition, and the legal market in India is no different. I think it’d be beneficial, both for local firms as well as international firms, if foreign firms were allowed in. However, care does need to be taken to ensure such competition doesn’t lead to an unfair playing field in India.
Any market thrives with competition, and the legal market in India is no different.
Anuj Agrawal: You were the founding Managing Editor of the Parker School Journal of East European Law, as well as Managing Editor, Survey of East European Law, and on the Journal of Transnational Law.
How have the skills imbibed during academic research helped you in your legal practice?
Geoffrey P Burgess: You’re the first person to ever ask me this one! For reasons unknown to me, I started taking Russian language in 1984, during the bad old days of the Soviet Union and the Cold War. I had no idea I would stumble into one of the most remarkable economic and political transformations in modern history. Everyone was surprised how quickly things changed without much bloodshed.
I dove into Soviet/Russian matters when I was at Columbia Law School in the early 90’s and managed to make several trips over, participate in exchanges, organize symposia, get involved in academic research as you note – all culminating with a period studying law at the Russian Academy of Sciences.
My professors really encouraged us to apply academic structure and critical thinking around all these momentous events that were happening in real time. In Moscow and in New York, all efforts were on understanding and catalyzing change for the better. We were constantly asking, “what?”, “why?” and “how can it be better?” You never stop thinking this way as a corporate lawyer.
In Moscow and in New York, all efforts were on understanding and catalyzing change for the better. We were constantly asking, “what?”, “why?” and “how can it be better?” You never stop thinking this way as a corporate lawyer.
Anuj Agrawal: What do you think are the skills required to be a good cross-border M&A lawyer?
Geoffrey P Burgess: I may have answered this partially in the last question. Here’s a quick list:
1. Learn quick. In cross-border M&A, no two situations are the same. you’re often confronted with a new legal environment, new parties, a new industry, a new unique local issue. You need to be able to get up the curve very quickly. And cultural differences play a much bigger role than many people appreciate, so invest in learning about those too.
2. Be flexible. The approach always has to be catered to the situation. You need to be creative, able to find solutions which meet the varying demands and expectations from parties with entirely different starting points.
3. Be resourceful. Survey lessons learned from jurisdictions or situations, and apply them to another can be important, and help you get to the right solutions quicker.
4. At the end of the day, it’s about people. Negotiating a good deal for your client is solving a problem to get the best outcome for everyone. Listening and understanding the position of all parties are crucial. And it is impossible to fully appreciate what is going on without having a solid basis of communication. Personally, I am a big fan of meeting the key players on the deal early on. Early investments in relationships pay big dividends through the life of the project.
At the end of the day, it’s about people. Negotiating a good deal for your client is solving a problem to get the best outcome for everyone.