Alexei Zakharko and Mathieu Fabre-Magnan of Dentons Russia—Russia’s 2020 “Law Firm of the Year” in Mergers and Acquisitions—discuss how they are preparing for emerging trends in the next couple of years. In an interview with Phillip Greer, CEO of Best Lawyers, Zakharko and Fabre-Magnan also speak to how Russia’s national and global policy have changed the landscape of their business.
KPMG has predicted that the largest sector for investor activity in 2019 and 2020 will be consumer markets and IT. Do you agree with this prediction, and what major trends do you anticipate will shape the landscape of corporate M&A in the upcoming years?
Mathieu Fabre-Magnan: Consumer markets and IT are definitely segments, which are growing for M&A deals. There are also some important developments in other fields, which attract foreign investors—for example, in the energy field.
Alexei Zakharko: IT is seeing an increased pipeline of deals mainly in the private equity and venture capital space. I think in a few years we'll have a lot more IT deals compared to all other sectors. Maybe like half of the deals in the coming years will be just in the IT space.
Are there any other important changes in either national or global policy that have impacted M&A in Russia?
AZ: Things that happen in politics do have a direct influence on the Russian M&A market. We do see some kinds of restraints on investors entering the Russian market depending on their profiles and their position on various things. So the foreign investors are very cautious on entering the market.
MF: Yes, the elephant in the room is the sanctions against Russia, which were imposed in 2014. These have had an obvious impact on the flow of foreign investment, but most significantly it has had an impact on the profile of the investments.
How are these changes impacting your internal focus and strategy as a firm?
MFM: Well, I think there are several effects on us. First of all, because the nature of the work in the M&A space has changed so much, we've had to adapt our teams. If you look at a corporate practice five to 10 years ago and now, I think one of the most striking things is that the leading role is now taken by Russian partners working on their largely Russian deal-flow. There is less space for foreign lawyers and for foreign investors on M&A deals.
AZ: The number of deals has decreased. The new sanctions practice, which did not exist five years ago, has been created so we have a team, actually, which involves not only people in Moscow but also in Brussels and in Washington advising clients on sanctions. That has required quite a bit of agility on our side, and also some lateral recruitment to complement our teams.
This interview has been edited for length and clarity.