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Competition is high in Bulgaria’s accelerating M&A market

Clients’ expectations are pushing firms to take a multi-disciplinary, multi-jurisdictional approach, explain Deloitte Legal’s Reneta Petkova, Kaloyan Yordanov, Nikolay Kolev and Hristo Milushev

Please give us an overview of the current legal market in Bulgaria and how any recent developments have impacted your practice?

The high level of competition in the Bulgarian market, which includes both well-established local players and international law firms, has brought down the price for legal services and underscored the need for effectiveness as a driving ethos of the modern Bulgarian law firm. A high quality of work is expected by clients. The rise of technology has created the conditions, and increased demand, for the formation of multi-disciplinary advisory teams to work on all aspects of a transaction. This trend has provided a distinct advantage for Deloitte Legal, due to our extensive experience in forming teams across disciplines and jurisdictions. The high level of synergy with advisory groups within the Deloitte brand has helped us ensure quality and efficiency.


What significant trends exist in the M&A market presently? Are you seeing these just domestically or internationally as well?

The Bulgarian M&A market continues to accelerate, with 2017 marking a threefold increase in size on an annual basis. The real estate sector continues to be the most attractive field for M&A transactions with an increasing focus on office space. The global trends of technological convergence, or the acquisition of technology companies by non-tech buyers, and healthcare M&A are yet to make an impact on the market.


What are the three biggest challenges to practising M&A in Bulgaria at the moment?

The rise of technology has enabled actors in the M&A market to pursue deals more aggressively and conclude their business in shorter time frames. This has pushed law firms to deliver results at a much faster rate, which presents them with the challenge of increasing their efficiency, while retaining the level of quality of their services. Technology has also improved communication and, thus, made multi-disciplinary cooperation a necessity. Traditional law firms’ lack of sufficient experience in such endeavours can pose an obstacle to the delivery of a cohesive service. Finally, the increasing prominence of cross-border operations demands a high level of proficiency in foreign languages, as well as extensive knowledge of global M&A trends.


How does M&A fit into your firm as a whole? Is it easy to collaborate with other teams?

Mergers and acquisitions remain a core focus of Deloitte at a global level. Our organisation is structured in a way that enables us to swiftly establish channels of communication between professionals of various disciplines and jurisdictions. This allows us to provide one-stop-shop services to our clients without sacrificing quality and efficiency. Depending on the client’s needs we offer support in financial analysis, tax, risk advisory, and so on. As a result, our team has established a prominent presence in the M&A market. In the past year, we have worked on some of the most significant transactions in Bulgaria.


What advice would you give to the next generation of M&A lawyers?

The legal profession has changed dramatically in the past decade. Advances in automation are gradually rendering some traditional legal skills, such as research and contract drafting, obsolete. A key strength of the next generation M&A lawyer will be the ability to communicate with clients, to manage their expectations and know their business, their strategy and
risk-taking proclivities. Next generation professionals must also be adaptive. Traditional forms of competition between law firms are gradually changing,
as market conditions and client expectations push firms to form
multi-disciplinary teams and collaborate on an unprecedented level.


What are your predictions for M&A in Bulgaria over the next five years?

The outlook for the market is very positive. The accelerating growth of the Bulgarian economy has provided local players with the funds and the incentives to expand their operations. At the same time, the prospects for profitability will continue to attract foreign investors. The main threat to the market remains the local political instability and the possibility of another global economic crisis.