Raymond Goh

We asked him about the role of in-house counsel in the M&A process.

Asian-mena Counsel: At what stage in the acquisition process should the in-house legal team start to be involved — before a specific target is even identified?
Raymond Goh: Absolutely, it is extremely helpful to involve a senior representative of each stakeholder, including the legal and compliance team, at the very outset — even if it is just to brainstorm ideas or potential jurisdictions, sectors or targets that may be of interest.

An experienced and commercially savvy counsel would be able to spot potential wrinkles — a smell test of sorts — and come up with various options or alternative transaction structures to minimise risk exposure and enhance the likelihood of success.

As the legal and compliance team is involved in all of our acquisitions around the world, we are able to draw upon the cumulative experiences and lessons learnt from all of these transactions when advising the local deal team in any particular country.

In a nutshell, instead of reinventing the wheel we can avoid the mistakes made on previous transactions and come up with a “new and improved” version of the wheel within a shorter period of time.

Having said that, these legal and compliance representatives have to “earn” the trust and respect of senior management and various stakeholders by demonstrating that they are reliable and commercially effective business partners. This has to be done on a consistent basis — you have to demonstrate value on each and every single transaction that you are involved in and justify your place at the table.

This is one of the key challenges that in-house counsels face and those who excel in this regard can quickly become an indispensable part of every transaction and a trusted sounding board for the senior management.

AMC: What are the key roles of the in-house legal team once a target is identified?
RG: Once a firm decision has been made to pursue a particular target, the Legal & Compliance team should discuss with the relevant business unit the necessity of bringing on-board external counsel, especially for transactions in sectors or jurisdictions which they are not familiar with.

Even with external counsel on-board, the legal and compliance team should remain closely involved in every stage of the transaction. The legal and compliance team has a unique vantage point — we have a better understanding of the commercial drivers and other considerations behind each transaction, the corporate culture and inner workings of the company as well as the stakeholders whose approvals are required before a transaction can be consummated.

While risk management from a group perspective remains a key priority, the legal and compliance team should also facilitate and support the consummation of the transaction.

It can be a delicate balancing act. An experienced and commercially savvy legal and compliance team should be able to come up with options, alternatives and potential solutions instead of saying “no” all the time.

AMC: What about external counsel — what is the best way to manage their contribution?
RG: External counsel plays a critical role in the success of each and every transaction, especially in jurisdictions or sectors which are relatively new to the company.

One of the best ways to partner with external counsel is to have a candid discussion at the very outset and maintain an open dialogue with them throughout the transaction in terms of our and their expectations, whether in relation to the work scope, fee structure or any other issue that comes up during the course of the transaction.

Transactions, and especially multi-billion dollar cross-border M&A transactions, rarely progress in a linear fashion or as expected. Unanticipated events invariably occur and the way in which we work with our external advisers and recognise the sacrifices that they have made go a long way towards building a trusted and mutually beneficial relationship for subsequent transactions.

Every relationship is a two-way street — being respectful of and candid with external advisers, regardless of whether they have been retained on a particular transaction, is extremely important.

Treat external advisers the way you would like to be treated. The world is a small village after all.

AMC: Bringing it all together, what makes an M&A deal successful?
RG: Team work (ie, no superstar mentality or prima donnas regardless of seniority or background), tenacity, creativity and the willingness to go the extra mile.

Having a good counsel by your side can mean the difference between a (painfully) successful deal and a successful deal that is fun and enjoyable.

AMC: What are some of the common pitfalls to avoid?
RG: Three common pitfalls include underestimating the complexity of the transaction, not paying sufficient attention to potential cultural differences between the purchaser and the sellers, and being too eager to continue pursuing a transaction when circumstances have changed.

On the first point, there is a tendency to underestimate the complexity of a transaction when you have done similar transactions multiple times across various jurisdictions. However, each transaction is or will subsequently turn out to be unique in its own way and catch you off-guard the moment you start to relax and take your eyes off the ball.

On the second, cultural differences continue to play a significant role in international M&A transactions. While this has improved considerably over the years, the importance of spending sufficient time to gather information, explore differences in culture norms, and the other party’s perception of your team’s negotiation style cannot be over-emphasised.

Finally, it is extremely helpful, at the very outset, to establish core principles and your best alternative to an agreement. There can be a tendency to avoid drawing a line in the sand once negotiations have reached a fairly advanced stage. Knowing when to fold the cards takes a lot of courage and knowing your bottom line before negotiations commence can make a difference between happily-ever-after and a post-integration nightmare.

AMC: Are there any notable trends that you see in M&A among Chinese companies?
RG: Chinese acquirers are increasingly sophisticated and have started to beef up their in-house business and legal teams with top-tier talent from other well-established international financial institutions. Cross-border M&A transactions, especially mid-size and big-ticket deals, are likely to increase in the near future.

They are also likely to be more selective in their strategic and principal investments, and focus on sectors within or complementary to their core competencies.