We now hear from Pritha Jha who is an expert in ensuring that M&A transactions run as smoothly as possible. Here she discusses how parties can ensure their deal is completed in the least stressful way, and what the investment scope is currently looking like in India.
When negotiating contracts, how many people are ‘too many people’? What would you claim as the ideal team for negotiation?
It is not about how many people, but more to do with how many different types of personalities are involved. As long as the negotiating table is evenly balanced with people who are aggressive negotiators, people who are passive observers, and of course those who have years of experience in deal making, negotiations are fruitful and move along smoothly. Generally, a negotiating team should consist of no more than four people on either side: a mix of individuals from the target and the acquirer that know the business, and lawyers that know their documents and the sector in which investment is being made. There can never really be a perfect team, you need to draw resources depending on the crux of what is being negotiated.
When has testing boundaries worked in your favour during negotiation? What would you say are key characteristics to maintain in order to achieve the ideal outcome for your clients?
There are numerous times when a party on the other side has staged a “walk out” in the middle of negotiations. That can be troublesome. But honestly, in most cases this is more of a positioning and negotiating tactic. Take a step back, give both sides a week to cool off and they will be back on the table to find the middle ground that works for both. Rarely have I ever seen a deal fall through due to legal negotiations. There is always room to negotiate. You need to figure out what will work for you and the other side. The only way to cut through the lengthy negotiations is to offer solutions and think out of the box instead of harping on about what has already been stated and is not agreeable.
What difficulties do you face when advising multi-national companies? How do you ensure your knowledge on each related jurisdiction enables your clients to make the best decision?
The expectations of multinational companies are very high. They expect the turn out time to be short and require a high degree of expertise.
When advising multinational companies across jurisdictions, one has to be at least generally familiar with the legal framework of the relevant offshore jurisdictions involved in the transaction, though one is not expected to be an expert. It is not easy to keep oneself updated of the laws of multiple jurisdictions. You keep yourself briefly updated on the significant developments in such jurisdictions through interaction with law firms of these jurisdictions.
What are common mishaps that acquirers often make when trying to bring in innovative change to the sellers’ share – especially in a case of part ownership?
Part ownerships can be tricky. It is very important for the acquiring party to understand the kind of corporate culture that the target follows. Strategic acquirers tend to believe that once the acquisition is made, they can bully entrepreneurs and everyone within the organisation to adopt new policies of the acquirer overnight. Change is difficult to deal with for most people, and imposing it can lead to needless hostility. Sometimes, changes can be imposed without the attempt to have any prior discussions with the management team. In my experience, it is very important to have people with great soft skills on the ground post acquisition to make the acquisition successful. Managing the expectations of people, moulding people within your own scheme of things, making them work with you rather than against you, at the same time making it look like a collaborative effort is an art few people can master. The actual success of an acquisition can depend greatly on this.
How have you seen the M&A sphere change over the years - have there been any significant changes that took you by surprise?
The M&A sphere has changed over the years and recently has been very active. As the gestation period for setting up a new business could be long and cumbersome in India, growth through M&A is considered to be a speedier alternative. Further, due to changes in law such as: amendments to the takeover code, company law, competition law and foreign investment regulation, there has been an increase in the M&A activity. Since the last few years, even private equity funds have been engaged in M&A, which earlier saw mainly strategic buyer participation.
In the next year, what investments are you looking out for in India?
M&A in media and advertising is growing at a very quick pace. Having advised on most of the acquisitions within this space in India over the last few years, I expect this sector to be active over the next couple of years as well.
On the PE side, we have been very active in the healthcare, pharmaceutical, financial services and insurance space over the last few years. Given the recent foreign investment liberalisations in these sectors, we expect a significant growth in transactions in this space as well.
Pritha Jha
Associate Partner
DSK Legal
www.dsklegal.com
Pritha Jha is an associate Partner at DSK Legal, who specialises in private equity and strategic acquisitions of media and advertising companies. After graduating in law in 2007, her years of experience has enabled her to work up the legal ladder. Her motto is: “Achieving deal closure is a matter of knowing what is of importance to a client and negotiating in a manner that addresses concerns of all parties in the best way possible. A good deal is where you get a win-win for all sides, where the bigger picture can be achieved. Think out of the box!”
DSK Legal was set up in 2001 and has since established an excellent reputation for its integrity and value based proactive, pragmatic and innovative legal advice and its ability to help clients effectively traverse the complicated legal and regulatory regime in India. With offices in Delhi, Mumbai and Pune, DSK Legal has grown rapidly on the strength of its expertise to a multi-disciplinary team with over 100 lawyers, including 13 partners. We are modern and inclusive in our outlook, and have a solution oriented approach.
