October 18, 2016
A recent article in the Legal Post highlights the resurgence in the global private equity market and the shifted landscape for players in the sector. Partner Michael Akkawi is quoted in the article in reference to escalating valuations for businesses and the increased competition to buy them. Michael explains the importance of a clear strategy to determine how the return on investment will be achieved for winning bidders. Below is an excerpt of the article.
Another option gaining appeal, especially for some of the larger funds, is to expand into new sectors such as mining and oil and gas. Many big institutional investors also focus on private equity funds that softly promise them co-investment deals, Akkawi says. “This can improve overall return by decreasing fees.”
He adds that joining forces can be pivotal for many investors, but they must be the right partnerships. “It’s like picking your dance partners.”
The pace of the private equity market is not expected to abate. “For the last three years minimum, our practice has been busy on mergers and acquisitions and the fund formation side. We don’t see it slowing down,” Akkawi says.
For lawyers, the volume of business does not translate into an equal billing volume, however. At auction, for example, clients may only win one out of every 15 deals, and charging for every transaction is not feasible.
“We need to work out what will work for our client,” Akkawi says. “If we’re not proactive to help clients work in this area, we will fall back.
“Our clients are sophisticated investors,” he adds. “They know what they need from lawyers. They know what value-add is from lawyers.”
The key to success for lawyers looking to make their mark in the private equity arena is having a genuine interest in business and a substantive understanding of what success looks like for companies in specific sectors. There is an expectation that lawyers will demonstrate creativity and offer solutions, Akkawi says. “You need to be a partner in coming up with solutions for your clients. You can’t be an obstacle.”
To read the full article, click here.