I have been doing deals in the CEE region in one capacity or another for over a decade now. My initial introduction to the region was during my time in New York and London with Cleary Gottlieb where I frequently instructed local law firms in the region on cross-border transactions.
Perhaps because I grew up in Turkey until I started college, I found working in the CEE and with CEE lawyers quite enjoyable and felt that we often “spoke the same language” (despite the sometimes-inevitable tension between international counsel and local counsel on transactions due to cultural differences, multiple time zones, and what have you). Now that I practice in Turkey, my involvement in the region has unsurprisingly increased and I find myself working as co-counsel with other firms in the CEE or referring work to one another almost on a daily basis. And I still very much enjoy working in the region.
One thing has changed over time, though, and that is the level of deal sophistication among CEE law firms. The region has always had some top-class lawyers, on whom any multinational client could rely. Today, however, I observe a much deeper and sophisticated legal market than I did a decade ago. In particular, I see many younger lawyers with flawless English, as well as excellent drafting and negotiation skills, advising their clients with a level of sophistication matching international law firm standards. That should not be too surprising. There are many more opportunities today for CEE lawyers to interact with their counterparts in larger markets, study abroad and have access to information than used to be the case until relatively recently. Luckily for all of us, many lawyers and law firms have been using these opportunities wisely, benefiting themselves and their clients at the same time. It will only get better.
Sophistication alone, however, is not sufficient, of course. Ours is a volatile region (then again, which region isn’t these days?). For example, in 2016, the year that will be remembered, among other reasons, for the Brexit vote and Trump’s election, the number of M&A transactions in CEE declined (although the total value of these transactions went up as compared to 2015). The impending major political shifts of 2016 seem to have put many deals on hold in the region while investors cautiously waited – and are still waiting in many cases – for the dust to settle on various worldwide election and referendum results. Some of the deals put on hold earlier began to close towards the end of 2016, which gave a boost to the year’s transaction value numbers. This makes me optimistic about 2017 and I expect that many deals put on hold during the tumult of 2016 will close this year. I should note here that interestingly (and happily), Turkey, despite internal political instability and regional conflicts causing its activities to drop to their lowest level since 2010, still remains a powerful M&A market with its position – both by number of deals and value of deals – being the fourth most active country in the region. I expect Turkey to maintain its position, partly due to the expected sale of the approximately 600 companies worth an estimated total of EUR 9 billion, which have recently been seized by the Turkish government due to their ties to the terrorist group behind last year’s failed coup attempt.
In addition to volatility, we are also experiencing a shift in the investor base in the region, with Asian investments increasing at the expense of U.S. and Western European investments. Japan, China and India, by value of deals, were the first, third, and fourth investors in the region respectively (the UK was number two) last year.
Yet I find CEE lawyers to be responding well to the volatility and the unpredictability of their markets. Law firms in the region are diversifying their practices, adapting to the new realities of the market and quickly getting used to advising a changing client base with increasing budget sensitivities. I think it is partly an old world resilience that keeps us going and allows us to say “this, too, shall pass.” That resilience coupled with ever-increasing sophistication makes working in the CEE exciting and keeps me optimistic.
By Kerem Turunc, Partner, Turunc
This Article was originally published in Issue 4.2 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.