Local law firms in China remain the most attractive merger partners in Asia for foreign law firms, according to Hong Kong-based Ben Cooper, Managing Director, GRMExecutive. Cooper outlines the reasons why these mergers remain so attractive in this interview:
What opportunity do law firm mergers in Asia create for foreign law firms?
“There are a number of different opportunities that come from mergers with local law firms for foreign firms. The first, most practical advantage is gaining a license and appropriately qualified lawyers to practice local law in that jurisdiction, often using the target firm’s existing entity.
This is important when offering a full service to clients based both in the country of the acquisition and further afield, who may want to invest in that country.
Consequentially, this also opens up the international reach and expertise of the acquiring firm to the local firm’s existing clients. This is especially true for outbound M & A in the People’s Republic of China.”
Which jurisdictions in Asia are most attractive at the moment for mergers?
“China remains attractive for the reasons highlighted above, however, there are a number of regulatory issues that mean it is difficult to fully merge, or form a traditional joint venture. Both firms will maintain their separate legal status and shares / profits will not be split.
Other jurisdictions in which we have seen M & A activity have been in Singapore and Indonesia, with Malaysia’s liberalization of the legal markets yet to generate much activity of note.”
Will the slowdown in China’s economy create a less attractive law firm M & A market there?
“China may be slowing down, but the economy is still growing at a greater rate than the vast majority of other countries. Increasing regulation, and pressure to conform to international standards of compliance, especially in regard to anti-corruption laws, means that the need for foreign-qualified lawyers is greater than ever. This provides a good opportunity for any firm, especially US firms to move into the jurisdiction via a joint venture / association relationship with a local firm. The new Shanghai Free Trade Zone also makes such an arrangement easier.
The drawbacks of such a move are that a number of firms have found that such an arrangement often ends with the local firm gaining a lot more in terms of best practice knowledge and the international capabilities, than the international firm does in terms of a genuine relationship with the local firm’s existing clients.”
How can GRM help a foreign law firm make an acquisition/merger in Asia?
“GRMExecutive has an unparalleled network of Managing Partners / law firm COOs in the region, having been active for over 7 years here, and is in a very strong position to identify a target and broker any potential merger, including conducting enhanced due diligence. We are a partner of choice to law firms looking to establish a presence in Asia, whether through acquisition, joint venture, or an independent office.”
For more information, please contact: Ben Cooper, Managing Director, GRMExecutive