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The Buzz in the Czech Republic: Interview with Tomas Dolezil of JSK

The Buzz in the Czech Republic: Interview with Tomas Dolezil of JSK

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Things are pretty calm on the legislative front in the Czech Republic at the moment, says JSK Partner Tomas Dolezil, and nothing big is expected for the next few months either. "But next year,” he says, "the new government needs to prepare a number of legislative proposals. For instance, the Ministry of Finance is working on a reform of the Czech Capital Market.” According to Dolezil, “a concept is being discussed and produced, and is now waiting for some political guidance or discretion, and on this basis we expected legislative changes to be proposed next year. Among others it is expected that the changes will affect the Private Equity/ Venture Capital sector.”

The market itself is quite busy, Dolezil reports. "There is a lot of activity in the M&A market, as there has been for the past two years, in particular in the Czech mid-market,” he says. Still, even there, he says, "I can feel some difference from the past year or two in that the transactions are a bit slower now. Parties are not that easily coming to a conclusion and closing — they are a little more hesitant, a little more careful.” According to him, this is in large part a function of mis-matched evaluations. "The sellers’ expectations regarding the value of their businesses is really high — and not always realistic.”

It’s suggested to Dolezil that this phenomenon may be related, in part, to the increasing number of individuals who founded companies in the early years after communism now preparing their exits and retirements. Dolezil agrees that that is “definitely” a contributing factor. "Partners believe, as they did before the 2008 financial crisis, that their businesses have greater value in the eyes of investors,” he says. “But investors see things differently, from a financial point of view — and they don’t have the emotional capital that the founders are considering.” Not all of those companies are being sold to outside investors, of course, and he concedes that "you can see cases of successful succession to the family members,” but he says, "the truth is that the majority of cases are not going in this direction, and the founders are more often selling.”

In terms of what sectors are particularly active, Dolezil suggests that “traditional sectors in the Czech Republic are strong, like energy or machinery, obviously. In the last three years we’ve seen a lot of activity in e-commerce. And TMT generally is active.” He says, “there is a lot of activity on the real estate transactional market, as there has been for two or three years now.” It’s put to him that some peers in other markets have reported the beginnings of a real estate bubble. "We can see a bubble in various sectors here as well,” he says, “and especially residential real estate is overheated (in Prague in particular) — but the offices and retail sector is not so bad right now."

As far as the legal market goes, Dolezil says, “the major phenomenon is the number of spin-offs and boutiques.” He acknowledges that for clients, at least, "this is probably a good phenomenon — more choices, and clients always benefit from greater competition.” Of course, “for firms more competition is a challenge.” He is asked whether fees are continuing to drop from the pressure. "Fortunately, in the last two of three years, we don’t see that prices are going down,” he says, "since there is a lot of work in the market — but fees are also not returning to what they were before 2008.”

Ultimately, Dolezil says he’s content. It being August, “things are slower at the moment,” he says, "but there are some transactions still pending. The pipeline is healthy.” He concedes that of course not everything will materialize, “but for the next 6-9 months at least things look very good.”

Czech Republic Knowledge Partner

HAVEL & PARTNERS, attorneys-at-law, with offices in Prague, Brno, Bratislava, Pilsen, Olomouc, and Ostrava, has a team of 220 lawyers, tax advisors and 500 employees in total, is the largest independent law firm in Central Europe.

Our clients include large international companies, leading Czech and Slovak firms, including strategic state-owned companies and public sector authorities, as well as medium-size businesses, individual entrepreneurs, and investors. We advise approximately 100 of the Fortune 500 companies, and almost 50 of the Czech Top 100 companies. HAVEL & PARTNERS currently provides its services to a total of 2,000 clients. We have the most comprehensive international support available to both Czech and Slovak law firms. We provide legal and tax advice in 12 world languages in more than 90 countries around the globe. Up to 70 % of the transactions we deal with involve an international aspect.

HAVEL & PARTNERS was named the best law firm operating in the Czech Republic by the prestigious British rating agencies Chambers and Partners (2020) and Who’s Who Legal (2018, 2019). It is also the most successful law firm, providing the most comprehensive legal services in the Czech Republic and Slovakia, based on the total number of all nominations and awards in all years of the Law Firm of the Year awards. The firm became the absolute winner of this competition four times in the last six years, receiving the main award Domestic Law Firm of the Year in the Czech Republic (2015, 2017, 2018, 2020) and ranking as one of the most recommended law firms in all categories of law. Our company is also a three-time winner of the Law Firm of the Year award for Best Client Services (2015, 2016, 2019). In the field of M&A, HAVEL & PARTNERS is the best law firm in the Czech Republic based on the annual International Advisory Experts awards (2018, 2019). In Slovakia, it also won the prestigious global M&A Today Awards (2013–2018) for Mergers & Acquisitions six times in a row, and repeatedly won first place in the ranking by Lawyer International Legal 100 (2017, 2018). Prestigious international rating agencies EMIS DealWatch and Mergermarket have ranked HAVEL & PARTNERS among the leading law firms by the number of transactions completed in the entire CEE region since 2009. Based on annual awards of the Acquisition International magazine, HAVEL & PARTNERS has become the Law Firm of the Year 2019 in the M&A category in the CEE region.

Firm's website: https://www.havelpartners.cz/en/

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