tag:blogger.com,1999:blog-170110062024-03-23T14:00:49.135-05:00InternationalCounselCross-border legal issues, the internationalizing company and cost-effective alternatives to the global law firmDavid Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.comBlogger58125tag:blogger.com,1999:blog-17011006.post-62453682160365472642013-05-12T17:38:00.000-05:002013-05-12T17:38:26.085-05:00Chinese Investment in the US - Chicago Booth Emerging Markets SummitAs a second installment from the Chicago Booth Emerging Markets Summit which took place on April 27, one of the sessions focused on Chinese investment in the US. Many had anticipated a greater flow of investment flow into the US during the recession, and Chicago has been very interested in serving as a headquarters location for Chinese manufacturing and distribution with access to the entire country.<br />
<br />
Zhao Weiping, Consul General of China in Chicago, offered a nice summary of the state of Chinese investment in the US, though expressed the concern that Chinese investors may be reluctant to act in greater numbers due to a perception that their increased investment may be politically unwelcome.<br />
<br />
In his presentation, Consul General Zhao indicated that Chinese investment in the US has a short history - up from $2.7 billion in 2002 to $77.2 billion in 2012, for an increase of some 28 times. Here are some notable examples. <br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZFG9bTbBDR9Jp48FjdpVC7nE5eWixfek-ia14S2f3aT0zqQYxX0LxK-sKHf4Fcio1NBG0ucqyDlF0GyVDHCcbSIaWykEvXDFxqZDJ7lstLgY5clO_rDmwfqyPd-l68QLf0tD1/s1600/photo+(2).JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjZFG9bTbBDR9Jp48FjdpVC7nE5eWixfek-ia14S2f3aT0zqQYxX0LxK-sKHf4Fcio1NBG0ucqyDlF0GyVDHCcbSIaWykEvXDFxqZDJ7lstLgY5clO_rDmwfqyPd-l68QLf0tD1/s1600/photo+(2).JPG" height="240" width="320" /></a></div>
<br />
While Chinese officials are making a strong case to Corporate China that investment into the US should be increased, there is a perception among Chinese investors that the US is not open to Chinese investment, and Consul General Zhao provided several examples of investments that have been blocked.<br />
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<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCYta1_jbw2wYuwR2u09htgdqwOVwXmZrdY3O8pPZy89SLTGdQGaX-tCLcrJFrzTsKSfULIioF7IOpk6XqRrDIOrw5oatzzotCgtTniJ8d_r2_G9EVOepMpVKWaBYvbk9bzQcn/s1600/photo+(3).JPG" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjCYta1_jbw2wYuwR2u09htgdqwOVwXmZrdY3O8pPZy89SLTGdQGaX-tCLcrJFrzTsKSfULIioF7IOpk6XqRrDIOrw5oatzzotCgtTniJ8d_r2_G9EVOepMpVKWaBYvbk9bzQcn/s1600/photo+(3).JPG" height="240" width="320" /></a></div>
<br />
<br />
I countered at the session and personally to Consul General Zhao that the US is actually very open to Chinese investors, that those investments that have been blocked are some of the small numbers of inbound US investments that allegedly raise national security concerns, and that the vast majority of investments coming to the US from China are of a kind and size that will encounter no resistance at the US national level and will be welcomed with open arms at the state and local level.<br />
<br />
Moreover, I suggested that viewing US-bound investment through a lens of "government regulation/governmental review" may be understandable coming from an economy such as China with much more governmental involvement in regulating foreign investment. However, such a lens suggests much more governmental involvement in inbound investment in the US than is actually the case and may unnecessarily alarm potential foreign investors whose manufacturing, distribution and other activities are subject to absolutely no governmental regulation or interference.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br />
New investment dollars into Indian PE funds were down by 73% from 2010 ($7.7 billion) to 2012 ($2.1 billion). Over the same period, this compares with a decrease of 25% for China (from $14.5 billion to $10.8 billion) and a decrease of 6% overall for Latin America (from $4.5 billion to $4.2 billion).<br />
<br />
For India, there is still significant dry powder for new investments and capital is still being deployed, though it is the raising of fresh funds that is down. Why? Growth in India has declined from the range of 8 - 9% to about 5%. The Rupee has decreased in value, making dollar investments worth less than they were a few years ago. Inflation is up to about 10%.<br />
<br />
PE's reliance on debt to help finance deals has limitations in India (though India just announced some liberalization on debt that can be raised). Exits are hard - there are few IPOs and strategic investors are selective. Private equity continues to be a challenge since most businesses are run by families that do not like to relinquish control and don't want to submit to the outside influence as the cost of taking equity. Private equity in India dates only to 1991/1992 and many are still not used to the concept of capital in exchange for ceding part control.<br />
<br />
What about the next few years? Some promising trends: (1) a new Indian economic team is taking growth seriously and is rapidly gaining respect, and (2) the Rupee shows signs of strengthening and could be up significantly in the next 5 years. With growth potentially on the rise and the Rupee strengthening, this puts a tail wind behind all sectors. Even without this, here is an economy still in the early stages of potential, a bit overlooked compared to China and which even now is offering a respectable 5% growth. Moreover, even the present consumer class is in the range of 250 million people, and growing.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br />
<span style="font-family: georgia, times new roman, times, serif;"><span style="font-size: 15.199999809265137px; line-height: 22px;">Similarly, our largest clients and contacts remained committed to their global operations over the course of the recession, though the middle market and smaller companies tended to pull in their ambitions and stick closer to their home markets. While we are seeing evidence of a thaw, it is just these fast-growth markets that are ever more important in offsetting slower-growth US and European economies. </span></span><br />
<span style="font-family: georgia, times new roman, times, serif;"><span style="font-size: 15.199999809265137px; line-height: 22px;"><br /></span></span>
<span style="font-family: georgia, times new roman, times, serif;"><span style="font-size: 15.199999809265137px; line-height: 22px;">As the New York Times article observed: </span></span><br />
<span style="background-color: white; font-family: georgia, 'times new roman', times, serif; font-size: 15.199999809265137px; line-height: 22px;"><br /></span><span style="background-color: white; font-family: georgia, 'times new roman', times, serif; font-size: 15.199999809265137px; line-height: 22px;">"In fact, the case of General Electric, which reports first-quarter earnings on Friday, neatly illustrates how overseas operations at many of the most familiar American companies have grown rapidly in recent years even as domestic activity has lagged. Total employment at the company dipped slightly to 305,000 in 2012 from 316,000 in 2005, but the number of workers it employs in the United States fell more sharply, to 134,000 from 161,000 in 2005. Over the same period, the proportion of sales that came from the United States fell to 47 percent from 55 percent."</span><br />
<span style="background-color: white; font-family: georgia, 'times new roman', times, serif; font-size: 15.199999809265137px; line-height: 22px;"><br /></span>
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<span style="background-color: white; font-family: georgia, 'times new roman', times, serif; font-size: 15.199999809265137px; line-height: 22px;"><br /></span><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br />
With a catch. Foreign retailers that opt for 100% equity in single brand retailing must source 30% of the goods sold in the retail outlets from Indian small-scale producers.<br />
<br />
Here are some quotes from the Economic Times:<br />
<br />
"'It is going to be a challenge for most brands. I don't know if brands will change their global manufacturing processes for India,' said Sanjay Kapoor, managing director of Genesis Luxury, the joint venture partner of Burberry in India, which also represents other luxury brands like Canali, Jimmy Choo and Bottega Veneta." . . .<br />
<br />
and also:<br />
<br />
"'The scale of the Indian market is small at the moment for it to make sense of the luxury brands to start manufacturing in India, only for India,' said Neelesh Hundekari, principal at consulting firm AT Kearney."<br />
<br />
As cross-border lawyers representing companies entering India and many other countries, we have found that foreign equity liberalization is often only part of the story - other restrictions can impede investment opportunities. For example, some years ago in Japan a liberalization to foreign retailers was in effect blocked by the ability of local Japanese retailers to veto a foreign retailer's entry on a number of very broad grounds.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br />
<br />
The current retail status: 51% foreign equity is allowed in "single brand" retailing (think Armani) but no foreign equity allowed in "multi-brand" retailing (think Walmart). Walmart was still able to enter India through a joint venture in back-end operations and distribution even though its Indian partner, Bharti, owns 100% of the front-end retailing.<br />
<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiONzSNoic0Ki66wmJLX2E4I-sHts_ab2ZZw7Mys_uW1BIh8Bp5OLWeb2xRIAalR3-fDCH858pPRlXNZhra8KigSduD6k9cct9RSvWsxQYUDDwHaWgt2ejS1OnxsN9dGyXKBJ0H/s1600/Glass.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="133" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiONzSNoic0Ki66wmJLX2E4I-sHts_ab2ZZw7Mys_uW1BIh8Bp5OLWeb2xRIAalR3-fDCH858pPRlXNZhra8KigSduD6k9cct9RSvWsxQYUDDwHaWgt2ejS1OnxsN9dGyXKBJ0H/s200/Glass.jpg" width="200" /></a>The November announcement was that 51% foreign equity would soon be allowed in multi-brand retailing and that the 51% in single-brand would be increased to 100%.<br />
<br />
As with many countries, retail raises sensitive political issues due to the large numbers of small local retailers (and their bigger counterparts) that feel threatened by a foreign influx of retail sales. An outcry in India after the announced liberalization caused the Indian cabinet to put the multi-brand change on hold, and the foreign and local press have been spilling a lot of ink over this.<br />
<br />
Not ideal, though we heard today that the Indian government is still moving ahead with the change to allow 100 per cent foreign direct investment in single brand retail.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;">Whatever the type of your cross-border agreements, it is dangerous to assume that a court judgment from a convenient and familiar local court would be enforceable against a foreign party with assets in another country. </span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;"><br />
</span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;">It is one thing if the foreign party has in-country assets (say in the US) that can be attached locally (such as in domestically enforcing a US court judgment against assets in the US). If is another matter if one needs to rely on the generosity of foreign courts to enforce a judgment.</span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;"><br />
</span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;">There are generally no treaties that will require the enforcement of a foreign court judgment (except among certain groups of countries), and local courts may look to uncertain concepts such as whether the foreign court offers reciprocal enforcement and may require a re-litigation of the underlying issues.</span></div><!--EndFragment--><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<div class="MsoNormal"><span style="font-family: Calibri; font-size: 11.0pt;">Sales terms and conditions are also embedded in web sites, whether or not your company’s site is e-commerce enabled. Many companies do not focus on the fact that these terms need to comply with cross-border laws and regulations. </span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11.0pt;"><br />
</span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11.0pt;">Opt-in and opt-out rules and a maze of privacy and data protection requirements in Europe and elsewhere also present lurking enforcement and liability problems if local-country rules have been ignored. Marketing rules in many countries also need some attention. <o:p></o:p></span></div><div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11.0pt;">We suggest pulling your company further out its “home country centric” approach, especially if you have an important customer or supplier base in multiple countries. Your counterparts will also appreciate your international savvy and professionalism as a result.<br />
<br />
<!--[if !supportLineBreakNewLine]--><br />
<!--[endif]--><o:p></o:p></span></div><!--EndFragment--><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<div class="MsoNormal"><br />
</div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;">If distributors are also involved, these terms can also be inconsistent with the distributor agreement terms, leading to confusion and heightened liability. </span><br />
<span style="font-family: Calibri; font-size: 11pt;"><br />
</span><br />
<span style="font-family: Calibri; font-size: 11pt;">As a first step, and for a low fixed price, we assist clients by gathering together their purchase order or sales terms, analyzing them, and then offering options for implementing best-practice changes (with foreign local law adjustments) along with clear budgets.</span></div><div class="MsoNormal"><span style="font-family: Calibri; font-size: 11pt;"> <br />
<br />
<o:p></o:p></span></div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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</div><span style="font-family: Calibri; font-size: 11pt;">Far better to keep your company out of local courts and help limit the impact of local dealer protections, such as by creating a best-practice cross-border distribution and agency agreement templates with adjustments for key international markets. Laws may also limit your ability to set prices and designate territories, as well as require unexpected taxation on revenues. The small amounts invested in agreement optimization can be repaid many times over in improving your dealer relationships, avoiding disputes and allowing early termination if necessary.</span><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br />
The name: King & Wood Mallesons.<br />
<a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnOk3PsxKJ3V2Xf2ZZxVUcMeQ_gUsJIepZPrP3RTZVyyTVGFade6VgLCjKwxXRnPbWtEZ17aLcrW6l0w7prVE_YaAjqZi8iJOcc24Z19KBfmbJBWg6yqIL_vU7M1wv34SXlEoC/s1600/ICBamboo.jpg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="226" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjnOk3PsxKJ3V2Xf2ZZxVUcMeQ_gUsJIepZPrP3RTZVyyTVGFade6VgLCjKwxXRnPbWtEZ17aLcrW6l0w7prVE_YaAjqZi8iJOcc24Z19KBfmbJBWg6yqIL_vU7M1wv34SXlEoC/s400/ICBamboo.jpg" width="400" /></a><br />
A sign of the times that a significant Chinese law firm would help to lead such expansion.<br />
<br />
Note that foreign and Chinese law firms are not allowed to share revenues and must be operated as separate law firms - hence the structure as alliances for McDermott's foray into China with MWE China Law Offices, a separate Chinese law firm.<br />
<br />
<br />
How will the Chinese legal community react to this one?<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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Yes, that Benjamin Franklin, United States founding figure and printer, writer, inventor, diplomat and scientist - the guy on the US $100 dollar note. While his observations were on partnership, they apply equally well to joint ventures, which after all are a form of partnership. Clients often observe, correctly, that good relationships are built on trust, but I counter that without something more to document and support the intention of the parties, those relationships are at great risk of dissolution, and especially so given the complexities and cultural disconnects in a cross-border venture. On to Mr. Franklin, from his Autobiography:<br />
<br />
"Partnerships often finish in quarrels; but I was happy in this, that mine were all carried on and ended amicably, owing, I think, a good deal to the precaution of having very explicitly settled, in our articles, every thing to be done by or expected from each partner, so that there was nothing to dispute, which precaution I would therefore recommend to all who enter into partnerships; for, whatever esteem partners may have for, and confidence in each other at the time of the contract, little jealousies and disgusts may arise, with ideas of inequality in the care and burden of the business, etc., which are attended often with breach of friendship and of the connection, perhaps with lawsuits and other disagreeable consequences."<br />
<br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhptolZkdw41JANiv_SqJXYO1ZnD5bp0FdxxdCNxnx_TtY1m4rwiThfiDUXHHhZ9Bm8q7gYa6FSvRDpViVpHoLSwzUdXB7A9Qu4gtvldhQEBt4HbfJS-RAHPGCZy24bOSWDoAmy/s1600/Franklin100Dollar.jpeg" imageanchor="1" style="clear: right; float: right; margin-bottom: 1em; margin-left: 1em;"><img border="0" height="176" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhptolZkdw41JANiv_SqJXYO1ZnD5bp0FdxxdCNxnx_TtY1m4rwiThfiDUXHHhZ9Bm8q7gYa6FSvRDpViVpHoLSwzUdXB7A9Qu4gtvldhQEBt4HbfJS-RAHPGCZy24bOSWDoAmy/s400/Franklin100Dollar.jpeg" width="400" /></a></div><br />
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</div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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</span></div><div class="p1"><span class="s1">WHY “LOCAL” MATTERS IN THE AGE OF GLOBALIZATION<br />
<br />
The following quote caught my attention - it is exactly our role as a cross-border law practice to help businesses to understand the local dynamics of different countries - with a focus on foreign market entry, legal systems and taxation (hence my slightly modified title above):<br />
<br />
"Marvin Zonis and Joseph Yackley argue that as global interconnectivity grows, understanding the local political, social, and cultural dynamics of different countries is critically important to the success of foreign policy and international business."</span></div><div class="p1"><br />
</div><div class="p1"><a href="http://www.thechicagocouncil.org/files/Event/FY_12_Events/11_November_2011/Why_Local_Matters.aspx">Here is a link to the registration</a></div><div class="p1"><br />
</div><div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJi3_D03ZIBrvB1ycXfObVgVQA7Se8RQEDxOlXJ4GGyLe1n-ZcltNcLYRxFjf2Ber64WpubAK1eWTgz_CfWtNF2QfH5404mvmHOS6Nha0FTosEo7uT8-7gUvQdR3G67zpxJOA7/s1600/ICGLobeBox.jpg" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="180" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiJi3_D03ZIBrvB1ycXfObVgVQA7Se8RQEDxOlXJ4GGyLe1n-ZcltNcLYRxFjf2Ber64WpubAK1eWTgz_CfWtNF2QfH5404mvmHOS6Nha0FTosEo7uT8-7gUvQdR3G67zpxJOA7/s320/ICGLobeBox.jpg" width="320" /></a></div><div class="p1"><br />
</div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">We are trying to gather as many interested lawyers and business people as possible for this substantive panel and a discussion of the IPBA annual conference to take place in New Delhi from February 29th to March 3rd.</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Please pass this along to whomever you think would have an interest.</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"> </span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Nov. 8 CHALLENGES IN DOING BUSINESS WITH INDIA</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Panel discussion, sponsored by the Inter-Pacific Bar Association, will address challenges facing U.S. companies doing business with India, including: Dispute Resolution from a Foreign Investor’s Perspective; India’s Progress with Corruption and Ways to Handle It; Perspectives on Working with Regulators and Bureaucracy; and Intellectual Property and Non-Competition Issues in Working with Employees and Partners. 5:45 – 8:00 p.m., 200 South Wacker Drive, Suite 3000, Chicago. No charge; advance registration required by November 4. For information & registration, please e-mail:laverty@internationalcounsel.com.</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">PANELISTS</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Lalit Bhasin</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Bhasin & Co., New Delhi</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Incoming IPBA President</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">David Laverty and Chandini Prakash</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">InternationalCounsel, Chicago</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Suhas Srinivasiah</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Kochhar & Co., Bangalore</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Praveen Agarwal</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"> </span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;">Agarwal Jetley, New Delhi</span><br />
<span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
</span><br />
<div class="separator" style="clear: both; text-align: center;"><a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3Qo1WoEBMY6fTkZfVqN6OlheHXTmVtW8HT6pvGC1Tb6k7YgGr7sv2RKS8B2MzxqWCcXcxdocvK20cawV3lemzOmXSAv8tI47ElGCmJKYpmuKObZZigCClzSFbsXm_pNwbJAym/s1600/ICSpices.jpg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="225" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3Qo1WoEBMY6fTkZfVqN6OlheHXTmVtW8HT6pvGC1Tb6k7YgGr7sv2RKS8B2MzxqWCcXcxdocvK20cawV3lemzOmXSAv8tI47ElGCmJKYpmuKObZZigCClzSFbsXm_pNwbJAym/s400/ICSpices.jpg" width="400" /></a></div><span class="Apple-style-span" style="-webkit-text-size-adjust: none; background-color: white; font-family: Arial, Helvetica, 'Nimbus Sans L', sans-serif; font-size: 13px; line-height: 15px;"><br />
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-32984414024949318242010-12-02T13:36:00.014-06:002010-12-03T09:27:12.220-06:00"Right-Sizing" Legal Services and Our Approach to Cross-Border Legal Practice<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBNGm4ZS0me_9fMx1vPueJGs8pdyUDXbtkhxYj9V8vuWIAgSvaUY25-VkVWf5KpKsF-yij4Wa0_USEh8l9mViQxK_yIUJANx8K6dHRxRof2zVY00dBXokI_wG-Zuqs_-rHD1vt/s1600/ICGLobeBox.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 225px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjBNGm4ZS0me_9fMx1vPueJGs8pdyUDXbtkhxYj9V8vuWIAgSvaUY25-VkVWf5KpKsF-yij4Wa0_USEh8l9mViQxK_yIUJANx8K6dHRxRof2zVY00dBXokI_wG-Zuqs_-rHD1vt/s400/ICGLobeBox.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5546211599025008242" /></a><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">The legal profession in the US continues to struggle to find its way in the face of companies and capable in-house counsel who are taking firmer control of their legal needs and destinies.</span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">The legal press has been abuzz in the last several months over the continued progress in "right-sizing" legal work, recognizing that fixed and alternative fee arrangements (no, not new, but now pursued with new-found urgency), legal process outsourcing form India (Thompson-Reuter's acquisition of Pangea3 is causing many skeptics to finally take serious notice), temporary lawyer services (in some cases delivered with increasing sophistication and marketing polish) and alternative law practices are part of a movement away from the traditional ways of doing legal business. </span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">Welcome to our world, in our case by re-imagining how cross-border legal services can be delivered more effectively and efficiently. Not just since the beginning of this particular recession, but since our founding back in the mid-1990s.<br /></span></span><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">In October, </span></span><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">Hildebrandt Baker Robbins released a </span></span><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">Law Department Survey of 252 companies in 23 industries that, as a Hildebrandt blogger describes it, "provides strong evidence of the economic drivers for the transformational changes rippling through the legal industry." </span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">For example, favored in-house cost management techniques now include implementing a</span></span><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">lternative fee arrangements (by 76% of those surveyed), k</span></span><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">eeping more work in-house (by 69%), and using</span></span><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"> regional or boutique law firms (by 68% of those surveyed).</span></span></div><div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">We have been strong believers in the need for change in the legal profession, and while our true secret sauce lies in our methodologies for delivering our senior, hands-on, more streamlined approach to solving cross-border legal issues, cost-effectiveness is an important outcome of our services. </span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span" style="font-family:arial;"><span class="Apple-style-span" style="font-size: small;">And of course we hope to continue to be just that sort of "boutique" practice that is in increasing use by internationalizing companies!</span></span></div></div><div> </div><div><br /></div></div></div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com1tag:blogger.com,1999:blog-17011006.post-25207994708514180722010-11-02T09:25:00.003-05:002010-12-03T09:29:43.810-06:00Global Foreign Direct Investment on the Rise<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaEok7mCKjxLxOeuvwA0wfa4iKpQaQg8AE6tAuY19N3u6m6LTqexU73AGzZXK90xB6NsERnJ6oJZmtsHYfdgC85pO2cs6Ms3n-MwLAJ5K7iA_w2qLJAhxpCpnFtAnEQ8LF5JYg/s1600/ICSpices.jpg"><img style="display:block; margin:0px auto 10px; text-align:center;cursor:pointer; cursor:hand;width: 400px; height: 225px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhaEok7mCKjxLxOeuvwA0wfa4iKpQaQg8AE6tAuY19N3u6m6LTqexU73AGzZXK90xB6NsERnJ6oJZmtsHYfdgC85pO2cs6Ms3n-MwLAJ5K7iA_w2qLJAhxpCpnFtAnEQ8LF5JYg/s400/ICSpices.jpg" border="0" alt="" id="BLOGGER_PHOTO_ID_5546209766439286258" /></a><br />Our November newsletter offered both statistics on the rise of global foreign direct investment from the lows of last year, as well as a link to our article on the use of the Netherlands as a holding company for foreign investors. <div><span class="Apple-style-span"><span class="Apple-style-span" style="font-size: small;"><br /></span></span></div><div><span class="Apple-style-span"><a href="http://archive.constantcontact.com/fs055/1101616312176/archive/1104018020954.html"><span class="Apple-style-span" style="font-size: small;">Click here for this and a few other newsletters in our archive</span></a></span></div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-88283096092997700182010-05-11T10:59:00.002-05:002010-05-11T11:04:25.952-05:00Mumbai RisesI just returned from Mumbai (and Singapore), where I was joined by our Netherlands-based colleague for presentations to corporate audiences and individual meetings with clients and contacts.<br /><br />The mood is optimistic. The Oberoi Hotel just re-opened. Breakfast at the Taj Hotel is a gracious as ever. Private equity is moving ahead with fresh rounds of investment. <br /><br />My lost iPhone was rescued by a taxi driver and returned to the Four Seasons, where I was able to retrieve it. OK, all is not perfect - I missed my flight out of Mumbai. <br /><br />Stay tuned for further updates.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com1tag:blogger.com,1999:blog-17011006.post-80923720198821311192010-03-02T11:50:00.005-06:002010-03-02T12:15:29.149-06:00Think Again Before Specifying US Courts in a Cross-Border Agreement<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-dJ6xyMiKNSqodRl3oL1DWngSpnOPvc4M1crfLiavqnky5lnwvODMPcDEUjGcJq0acgD1rnebEQnky9-_Bpd4bMQjrlRFN1MCcGXXmus0tpNSnrf915e6gliad5A6RjDjjv4T/s1600-h/JudgmentBrownVBoard.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 196px; height: 320px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg-dJ6xyMiKNSqodRl3oL1DWngSpnOPvc4M1crfLiavqnky5lnwvODMPcDEUjGcJq0acgD1rnebEQnky9-_Bpd4bMQjrlRFN1MCcGXXmus0tpNSnrf915e6gliad5A6RjDjjv4T/s320/JudgmentBrownVBoard.jpg" alt="" id="BLOGGER_PHOTO_ID_5444101243202338082" border="0" /></a><br />As I have written in the past, we seldom recommend that clients specify US courts as the choice for dispute resolution in cross-border agreements that may need to be enforced in another country. Not to single out China, but the China research below confirms an enforcement issue that US parties face in most countries.<br /><br />Arbitral awards are simply a better enforcement bet among the many signatory countries to the New York Convention – enforcement is required by the Convention in the absence of fraud and other specified instances. By contrast, the enforcement of US court judgments is discretionary and usually based in part on whether the US has enforced judgments from the other country on a reciprocal basis.<br /><br />Back in June, 2007, I posted a blog entry referring to a search for even a single example of a US court judgment that has been enforced in China. The search was posted by Don Clarke, a George Washington Law School professor who moderates an excellent China law discussion group. As far as I know, nobody in the discussion group was able to produce a single example.<br /><br />A member of the China discussion group just posted (on March 1) his own preliminary review of the 26 foreign court judgments and 16 arbitral awards that he could locate that requested enforcement in China through Chinese courts. The member is Wei Luo, Director of Technical Services and Lecturer in Law, Washington University School of Law Library.<br /><br />Mr. Luo found that almost all of the Chinese courts agreed to enforce the foreign court judgments if requested by a Chinese applicant. Yet, he did not find a single instance of enforcement if the applicant was a foreign party and the Chinese party did not agree with the enforcement.<br /><br />In contrast, Mr. Luo found that most of the Chinese courts granted the applications to enforce a foreign arbitral award.<br /><br />Many are finding that Chinese courts are improving and are becoming more open to arguments presented by foreign parties, and the uncertainty over the enforcement of foreign court judgments is an issue in most countries, not just China.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-17989342079201342662009-11-09T10:44:00.006-06:002009-11-09T15:37:22.251-06:00"De-Globalization" vs. "The Wal-Mart Effect" in India and Beyond<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicuVlXgQO3mTD_BteQtgMVJDK0sfmHoVH3Q9oPZkwR565zKOQOJ3ENQ3yNNOud4hwQ92Es_8TAjgBAY834DfWPtLx93DvicgQf5bPQIjAxBL_cJ6J3-2ITQjKDo4VvFE3EMGNL/s1600-h/AirplaneinSea.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 240px; height: 173px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEicuVlXgQO3mTD_BteQtgMVJDK0sfmHoVH3Q9oPZkwR565zKOQOJ3ENQ3yNNOud4hwQ92Es_8TAjgBAY834DfWPtLx93DvicgQf5bPQIjAxBL_cJ6J3-2ITQjKDo4VvFE3EMGNL/s400/AirplaneinSea.jpg" alt="" id="BLOGGER_PHOTO_ID_5402157905620995170" border="0" /></a><br />A few weeks ago, Jim Valderrama from Grant Thornton and I presented at an international roundtable event at the University of Chicago Booth School of Business - our theme was whether we have been seeing a "de-globalization" of US mid-market companies that will extend beyond the recession. (Thus, the tie-in to the photo caption - "Robinson (American) falling into sea near Nice")<br /><br />We looked at data on US direct foreign investment and cross-border acquisitions into many parts of the world, and there has clearly been a major drop in activity over the past 18 months. Yet, more of a drop in cross-border activity than in overall economic activity? Hard to tell, though I referred to evidence from some of our own clients and contacts that there has been a scaling back in ambitions among mid-market companies. For example, many have found that China has been more expensive and a greater drain on senior management than expected, and mid-market companies do not have the same level of resources to handle such far-flung expansion as do larger companies.<br /><br />Surely much of the cross-border expansion among mid-market companies and otherwise will be returning in strength as the US economy thaws. Many of course are more motivated than ever to take advantage of higher growth rates in BRIC economies and elsewhere and the "portfolio effect" of multiple bets in multiple countries.<br /><br />Wal-Mart is one of the many examples of companies placing great faith in international expansion, as is evidenced by recent moves in India. We have reported in the past on Wal-Mart's tie-up with Bharti in India to establish retail stores, though foreign retailers remain restricted in India from owning equity in "multi-brand" retailing (I was formerly the legal head of Kmart's international expansion in China and many other countries, and our blog entries have noted that market openings for retailing often lag behind other sectors - India's economy is otherwise quite open for most sectors).<br /><br />As reported in the November 6th issue of the Economic Times of India, Wal-Mart's chairman recently met with Prime Minister Manmohan Singh in New Delhi to lobby for more access to the Indian market, the company's CFO recently noted that Wal-Mart is stepping up growth in its international operations to take advantage of growing economies and opportunities in emerging markets such as China and Brazil, and the head of its international operations referred to a US$5 billion fund set aside for its international expansion and "India can use as much as it wants."<br /><br />We hope that the next tier of companies is paying attention to such aggressive faith in global markets and will not sit out the next round of revenue and profit opportunities outside of the US.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-2714638255623414152009-08-10T11:55:00.006-05:002009-08-10T12:31:40.925-05:00Largest Indian Outbound Deal Ever - Will it Happen?<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbpKyQLOzmjZNwttifdzpbVX6kG7j2zFVNy9zqegvvw9uAQ2AovdWHolHsKKHrhtoaYZ8FBo8b_io1NtzgtsNXoBOefZYRLELN94FSzBXmGsIrFK6GCExr-aaOy6qEnFtGq8_i/s1600-h/IndiaClouds.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 400px; height: 267px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgbpKyQLOzmjZNwttifdzpbVX6kG7j2zFVNy9zqegvvw9uAQ2AovdWHolHsKKHrhtoaYZ8FBo8b_io1NtzgtsNXoBOefZYRLELN94FSzBXmGsIrFK6GCExr-aaOy6qEnFtGq8_i/s400/IndiaClouds.jpg" alt="" id="BLOGGER_PHOTO_ID_5368385589337095634" border="0" /></a>Bharti Airtel had bid US$23 billion to take over MTN of South Africa, a major telecommunications company. If completed, the deal would become India's largest outbound deal to date, double the size of Tata Steel's $13 billion acquisition of Corus, the UK steel company, in 2006.<br /><br />However, the deal talks have been extended until the end of August and there is a cloud of uncertainty over the price and terms of the deal.<br /><br />The talks come at a time of a substantial decrease in India's cross border M&A activity - it was reported that as of May, India's outbound deal flow had decreased by 95 per cent as compared with the same period in 2008, falling from $7.4 billion to $370.8 million. We have been taking a periodic look at India's outbound investments and will offer an update shortly.<br /><br /><span style="font-style: italic;">Photo credit to Swamysk, whose photos are posted on Flickr</span><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-76637582288757960412009-05-26T10:13:00.009-05:002009-05-26T10:50:08.036-05:00Korean M&A Deals: Shedding Core Assets + Weak Won = Value<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKluGl32aoMzfn0jq6dKHBMuyzXHdexuy48TP3vjvbGa_hA1PeYTQ3GP4ZwfE9qTGMtdBCKw2r-aGwPf9gMSt5dJfWGXXpCAclfl4aGxOG4TvGoP-MzvrRKlNXiwPDp5cm-jY_/s1600-h/KoreaNamdaemun.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer; width: 240px; height: 240px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgKluGl32aoMzfn0jq6dKHBMuyzXHdexuy48TP3vjvbGa_hA1PeYTQ3GP4ZwfE9qTGMtdBCKw2r-aGwPf9gMSt5dJfWGXXpCAclfl4aGxOG4TvGoP-MzvrRKlNXiwPDp5cm-jY_/s320/KoreaNamdaemun.jpg" alt="" id="BLOGGER_PHOTO_ID_5340155433085606962" border="0" /></a>A May 20th Financial Times Article on Korean M&A is reasonably upbeat on the potential for further Korean deals and quotes a friend, Paul Kang, an investment banker who focuses on Korean M&A deals. Among the article’s observations (click the blog title above for the article and broader Korea report) are the following:<br /><br /><ul><li><span style="font-weight: bold;">Korean Companies Shed Non-Core Assets. </span>As is true in the US and elsewhere, until a recovery gathers strength, some Korean companies are exploring the potential sale of non-core assets to further finance and strengthen their core businesses. Goldman’s head of Korean investment banking indicates that this will help drive both domestic as well as cross-border Korean deals, and the article reports that many expect Korean M&A to become more active in the second half of 2009 as the push for disposal of non-core assets gathers momentum. </li></ul><ul><li><span style="font-weight: bold;">Actual Increase in Numbers of 2009 Deals. </span>What do the numbers show? Korean M&A deals increased from 333 in the first quarter of 2008 to 406 in the first quarter of 2009, although their combined value fell from $14.1bn to $12.4bn. Not bad in a rough environment.</li></ul><ul><li><span style="font-weight: bold;">Purchase of Prominent Korean Beer Company - An Example. </span>As a recent cross-border deal example, Kohlberg Kravis Roberts agreed to buy Oriental Brewery from Anheuser-Busch InBev for $1.8bn. This will be the largest leveraged buy-out in Asia in the past two years. Who hasn’t enjoyed a cold “OB” during a visit to Seoul?</li></ul><ul><li><span style="font-weight: bold;">A Weak Won Enhances Value to Foreign Investors. </span>The Korean won has fallen about 18 per cent against the dollar in the past year, making Korean assets cheaper for foreign investors, and the currency play alone is creating deal opportunities as it did during the 1997 – 1998 Asian financial crisis.<br /></li></ul>However, Paul Kang, a former Goldman banker and something of a realist, is skeptical that the outstanding Korean opportunities will generate significant foreign buying given the global uncertainties impacting potential buyers.<br /><br />That may be true, and too bad for the hesitant who are still kicking themselves for missing out on Asian financial crisis opportunities.<br /><br /><span style="font-style: italic;">The image is of Namdaemun gate in Seoul, Korea's National Treasure #1, photo credit to Charles Chan.</span><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-26137556714451539912009-03-23T20:45:00.002-05:002009-03-23T20:50:22.254-05:00Outstanding Value for Cross-Border Strategic Investment<table border="0" cellpadding="0" cellspacing="0"><tbody><tr valign="top"><td><span style="font-weight: bold;">Companies with the wherewithal to expand through acquisition and investment stakes may be finding once-in-a-career bargains.</span><br /><br /><h4><span style="font-weight: normal;">For example, Time Warner is purchasing a 31% stake in a Central European media company - a company whose share price was $106 last may and about $13 recently.</span><br /></h4><h4><br /></h4><h4><a href="http://www.thedeal.com/corporatedealmaker/2009/03/time_warner_deal_another_strat.php">Time Warner deal: another strategic capitalizes on downturn</a></h4></td></tr> <tr><td> <div id="tfoot"><em>Posted on March 23, 2009 at 1:27 PM</em><br /><br /></div> </td></tr> <tr><td><br /></td></tr> <tr><td> <div id="ebody3"> <img alt="prague.jpg" src="http://www.thedeal.com/corporatedealmaker/img/prague.jpg" class="mt-image-left" style="margin: 0pt 8px 8px 0pt; float: left;" height="109" width="150" />Compared to the price the target's shares commanded less than a year ago, Time Warner Inc. (NYSE: TWX) is getting quite a bargain in its <a href="http://www.reuters.com/article/marketsNews/idINLN39158520090323?rpc=44">purchase of a 31% stake</a> in Central European Media Enterprises Ltd. (NASDAQ: CETV). Bloomberg has the story.<br /><br />As recently as May, CME's shares were around $106. Monday, even after a 31% rise driven by the deal's announcement, they were around $13. Time Warner is paying $241.5 million for the stake.<br /><br />Founded in 1993 by Ronald Lauder of the cosmetics family, CME has suffered from the fact that its markets have gone from boom to an especially severe bust because of the global financial crisis.<br /><br />But Time Warner obviously thinks there's long-term growth in the markets CME serves. The company has an <a href="http://www.reuters.com/article/marketsNews/idINLN39158520090323?rpc=44">audience of 97 million</a> in Bulgaria, Croatia, Czech Republic, Romania, Slovenia, Slovakia and Ukraine, according to Reuters.<br /><br />Time Warner's move resembles deals by some other big strategic acquirers who are using the crisis to enter new markets at attractive prices. A previous example was Abbott Laboratories' (NYSE:ABT) <a href="http://www.thedeal.com/corporatedealmaker/2009/01/abbotts_well-timed_deal_for_ad.php">acquisition of Advanced Medical Optics</a> for nearly $2.8 billion in January. AMO's shares were way down because the recession has hurt its laser vision correction service.<br /><br />Look for more such deals in various sectors.-<i>Kenneth Klee</i><br /></div></td></tr></tbody></table><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-30131754976508268172009-01-26T18:01:00.004-06:002009-01-26T18:15:28.652-06:00Acquiring Troubled US Companies - Limiting Legal RiskHere is the first page of our updated article published this month in India.<br /><br />Let me know if you are aware of a US company in need of an investor or that is in search of a buyer - we are being asked by our contacts in India to pass-on opportunities that may be a good fit for an Indian buyer.<br /><br />The investment range can be as low as a few million dollars and into the US$20 million range - on the small side but often overlooked by intermediaries. Feel free to contact me (David Laverty) directly at 312 575 0601 or at laverty@internationalcounsel.com.<br /><br /><br /><a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3UAH_WIWdTDqfyVsWP2ebcSV3SaKtMHLbaBrU2Qn7GiusKtaWLZdDQsK8nA5vAGNU5xJS4kCqdxpZPLRPQZZK6xZC09rRR6M7KvR7zv4UK0MBOoDCm0wncN6BgBsHLQftZE37/s1600-h/IndiaOutboundDeals.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 291px; height: 400px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg3UAH_WIWdTDqfyVsWP2ebcSV3SaKtMHLbaBrU2Qn7GiusKtaWLZdDQsK8nA5vAGNU5xJS4kCqdxpZPLRPQZZK6xZC09rRR6M7KvR7zv4UK0MBOoDCm0wncN6BgBsHLQftZE37/s400/IndiaOutboundDeals.jpg" alt="" id="BLOGGER_PHOTO_ID_5295757903056576210" border="0" /></a><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-51283351187320980742009-01-26T16:27:00.009-06:002009-01-26T18:01:07.383-06:00Foreign Corporate Buyers of Troubled US Companies<div id="ebody3">Yes, there are excellent values among US companies that make this a very attractive time for those foreign buyers with the capital to acquire and invest. Yet, can a foreign corporate buyer hope to fully understand and participate in the process of purchasing a troubled US company?<br /><br />Yes, with the proper advisers. The following video interview takes this a step further - why not partner with an experienced distressed investor? Jonathan Rosenthal of Saybrook Capital LLC offers his views on such partnering opportunities - taken from this month's TMA distressed investing conference in Las Vegas.<br /><br /><br /><embed src="http://blip.tv/play/AeiKXoecGQ" type="application/x-shockwave-flash" allowscriptaccess="always" allowfullscreen="true" height="340" width="430"></embed><br /></div><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-87291199310373779812008-11-30T20:53:00.000-06:002008-11-30T20:55:57.360-06:00A pause for Mumbai<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhebJf92VJpam5t2Wyk6nJ05cgDSNuvmZAHjPLUBYTNsIquKgFKj8_QFhgJT9U1R2sBBWaVwFFDQ-6sYhuEzbgpnlXbE438xj6GtpRegz5CaNnFQpFA1e4dQ_L3VI68hC-UdSCg/s1600-h/3064271645_f87b77520a_m.jpg"><img style="margin: 0px auto 10px; display: block; text-align: center; cursor: pointer; width: 240px; height: 160px;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhebJf92VJpam5t2Wyk6nJ05cgDSNuvmZAHjPLUBYTNsIquKgFKj8_QFhgJT9U1R2sBBWaVwFFDQ-6sYhuEzbgpnlXbE438xj6GtpRegz5CaNnFQpFA1e4dQ_L3VI68hC-UdSCg/s400/3064271645_f87b77520a_m.jpg" alt="" id="BLOGGER_PHOTO_ID_5274649841943373842" border="0" /></a><div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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<br>Powered by <a href="http://www.feedblitz.com">FeedBlitz</a></form></div>David Lavertyhttp://www.blogger.com/profile/11480409308150429406noreply@blogger.com0tag:blogger.com,1999:blog-17011006.post-15750961203533770642008-10-05T20:55:00.013-05:002008-10-14T14:39:07.721-05:00Real Value Through Acquisitions of Troubled US Companies<a onblur="try {parent.deselectBloggerImageGracefully();} catch(e) {}" href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiY45fpx-Segg5joyYhhvVzcWfGecyLjhbgy17NwK4bwvYFpeyjG08Cn2QbC9nwrOrqpMwCVKAPfxsF37Yu7yX-flavwjJTf-sFvYpc1767rZAVbgQYUNiZE513fd1Eo4g8OowN/s1600-h/LehmanBankrupcy.jpg"><img style="margin: 0pt 0pt 10px 10px; float: right; cursor: pointer;" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiY45fpx-Segg5joyYhhvVzcWfGecyLjhbgy17NwK4bwvYFpeyjG08Cn2QbC9nwrOrqpMwCVKAPfxsF37Yu7yX-flavwjJTf-sFvYpc1767rZAVbgQYUNiZE513fd1Eo4g8OowN/s400/LehmanBankrupcy.jpg" alt="" id="BLOGGER_PHOTO_ID_5254615221873285698" border="0" /></a><span style="font-weight: bold;">“Meltdown in the world financial markets has thrown open new opportunities for Indian firms to buy out under-valued overseas assets that fit well into their gameplan for achieving global ambitions, India Inc's top CEOs say.” </span><span style="font-style: italic; font-weight: bold;">Press Trust of India</span><span style="font-weight: bold;">, October 5, 2008</span><br /><br /><div style="text-align: justify;">Given the current state of the US economy, corporate India and other foreign buyers are recognizing that this is a critical time to consider the acquisition of undervalued US companies, including through the US bankruptcy process. Though a purchase of a troubled company is more complicated than the stock or asset purchase of a healthy US company, tremendous value can now be achieved through the purchase of low-priced US assets.<br /><br /><span style="font-weight: bold;">In response to the current economic environment in the US, we have put together an experienced team of corporate transactional, restructuring and bankruptcy lawyers to assist foreign buyers of US companies. We also operate in a cost-effective way that is all but impossible to match by larger law firms. </span><br /><br />Not much more than a glance at financial headlines yields a very prominent example of the purchase by a foreign company of the assets of a US company through a Section 363 sale under the US Bankruptcy Code - Barclays’ purchase of certain assets of Lehman Brothers. On Sunday, September 14, Barclays had been negotiating with Lehman for the purchase of certain of its assets. The next day, Lehmans filed for bankruptcy protection. On Tuesday, September 16, Barclays was then bidding through a Section 363 sale process for the very assets it had sought, reportedly for several hundred million dollars less than the September 14 price. The sale would also result in the purchase of such assets virtually clear and free of any liens, encumbrances and liabilities. While the headlines blared the bankruptcy of Lehman, the story is also about a savvy foreign company making a play for cheap US assets through the US bankruptcy process.<br /><br /><span style="font-weight: bold;">What About an Asset Sale Outside of Bankruptcy Process – Better to Buy Before a Bankruptcy Filing?</span> A conventional asset sale pursuant to an asset purchase agreement may be possible if the target company has not yet filed for bankruptcy - such as was pursued by Barclays prior to Lehman’s bankruptcy filing. However, while such a sale avoids the expense and procedural requirements of a bankruptcy sale, shareholders and creditors of the selling company may later seek to reverse the sale by claiming that the sale was a fraudulent transfer. For example, the US Bankruptcy Code permits the reversal of a sale as a fraudulent transfer if the company receives less than reasonably equivalent value for its sold assets and the company was insolvent at the time of the sale.<br /><br /><span style="font-weight: bold;">A Bankruptcy Sale Under Section 363 - Real Value for Foreign Buyers.</span> This section of the US Bankruptcy Code allows a purchase of the assets of a company free and clear of liens and claims. This sale process under Chapter 11 of the US Bankruptcy Code involves an offer from an acquiring company (referred to as a “stalking horse”) to purchase the assets of the bankrupt company (the role played by Barclays in the Lehman transaction). The bankrupt company is then required to solicit competing bids and to conduct an auction to determine the highest and best bid. Even if the “stalking horse” loses the bid, it can be entitled to compensation for its time and expenses through a break-up fee and/or expense reimbursement that is approved in advance by the bankruptcy court.<br /><br /><ul><li><span style="font-style: italic;"><span style="font-weight: bold;">Advantages to the First Bidder (the "Stalking Horse"). </span></span>If other competing bids can beat the initial bidder as the “stalking horse,” why not wait for someone else to act as the stalking horse if you may lose the bid even if you gain a break-up fee? The stalking horse has some real advantages: (1) it is able to negotiate its own deal terms - other prospective purchasers must accept the stalking horse’s asset purchase agreement terms with few changes, (2) it is able to perform greater due diligence than a latecomer, and (3) other prospective purchasers must make bids that exceed the stalking horse’s bid by at least a specified minimum amount, plus the amount of any break-up fee.</li></ul><ul><li><span style="font-weight: bold;"><span style="font-style: italic;">A Deal Cleansed of Liabilities. </span></span>The end result, unlike in a conventional asset purchase sale mentioned above, is that the terms of the Section 363 sale are approved by the bankruptcy court and offer the buyer some degree of certainty that it is getting the kind of assets it wants without the kind of liabilities it seeks to avoid. We have recently discussed ways in which Indian companies may be underestimating the legal risks of US acquisitions - <a href="http://internationalcounsel.blogspot.com/2008/09/in-handling-us-legal-matters-what.html">click here for this discussion</a>. Here is a way to gain great value and limit such risks.<br /></li></ul><ul><li><span style="font-weight: bold;"><span style="font-style: italic;">Asset Agreement and Diligence Process is Otherwise Similar. </span></span>Though the asset sale agreement is subject to bankruptcy court approval, the process of negotiating and documenting the asset purchase agreement is no different from that of a conventional asset purchase sale. The parties enter into the same kind of confidentiality agreement and there is a due diligence process as in a conventional sale.</li></ul><ul><li><span style="font-style: italic;"><span style="font-weight: bold;">Such Bankruptcy Sales are on the Rise. </span></span>The numbers of these Section 363 transactions are increasing, with a greater share being pursued by foreign companies. As overall numbers, 32 Section 363 sales, worth $1.6 billion, were announced in the first quarter of 2008 as compared with 21 such sales, worth $888 million, in the first quarter of 2007. While an Indian buyer may be less familiar with the US bankruptcy process and may not move as quickly as an experienced US buyer, good US legal advice can help steer a transaction to conclusion. For example, in a recent sale of the assets of a US manufacturing company, an Indian buyer won the Section 363 auction process, and was able to navigate the compressed timing of the bankruptcy sale, even though it entered the bidding at a late stage.</li></ul><span style="font-weight: bold;"><br />Other options are also open to a company acquiring the assets of a troubled company, including the following:</span><br /><br /></div><span style="font-weight: bold;">Sale Under a Chapter 11 Plan.</span> This avoids the competitive bidding process under Section 363 and requires the investor to co-sponsor the target’s Chapter 11 plan of reorganization. The Chapter 11 plan is then voted on by the target’s creditors.<br /><br /><span style="font-weight: bold;">Secured Creditor Foreclosure/Sale of Assets. </span>Such an arrangement takes the form of a negotiated package with a secured creditor whereby the creditor would foreclose on a loan to obtain the assets and at the same time sell the assets to a foreign buyer.<br /><br /><span style="font-weight: bold;">Acquisition of Debt or Extension of Loan.</span> A foreign investor could either extend a loan to a target company or acquire the debt of a target company, and then either exert some degree of control over the target through loan covenants or even exchange the debt for the target’s equity.<div class="blogger-post-footer"><form Method="POST" action="http://www.feedblitz.com/feedblitz.exe?AddNewUserDirect">
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