Dealmaker – Cyril Shroff

The deal world involves many players, and it is well known that lawyers play a significant role. Great lawyers not only advise on legal issues, but also provide valuable business insights from their deal experience. In our effort to identify and recognize those that play an important role on commercial transactions, Bar & Bench is starting a feature titled “Dealmaker” in our Deal Street section. Based on the information provided/available to us, the Bar & Bench Team will nominate the “Dealmaker” each fortnight. We strongly encourage law firms and transaction lawyers working on domestic and international transactions related to India to provide us deal information to enable us to consider a member of your firm/you for this feature..Dealmaker: Cyril Shroff, Managing Partner, Amarchand Mangaldas.For the past fortnight, Bar & Bench recognizes Cyril Shroff as the Dealmaker for his role in Piramal Healthcare’s acquisition of Decision Research Group. We understand that the transaction was complex with multiple legal and commercial issues. He not only provided valuable legal advice to his client, but also helped the transacting parties to come together and close the complex deal..The Deal .Piramal bought Decision Resource Group (DRG) from private equity firm Providence Equity Partners, for Rs. 3,400 crore (US$635 million). The deal was announced on May 19, 2012 and the acquisition was completed on June 8, 2012. The acquisition has been financed by a mix of debt and equity..Piramal will operate DRG as a stand-alone business and it will remain headquartered in Burlington, MA. Other Counsels on the deal include Mintz Levin and Weil Gotshal & Manges. Mintz Levin acted as US Legal Counsel to Piramal Healthcare. Of Counsel Bram Shapiro led Mintz’s team. KPMG acted as Indian tax advisors to Piramal while Deloitte acted as US tax advisors. Weil, Gotshal & Manges acted as sole legal advisor to Providence Equity Partners. .Read Bar & Bench’s news report on this deal..We spoke to Cyril Shroff on the transaction and on some of the larger aspects of M&A transactions; what goes into making a good M&A lawyer; the legal risks involved in M&A deals and future trends..Dealmaker: An Introduction .Cyril Shroff has over 30 years of experience advising Indian and International clients on various M&A transactions, both domestic as well as cross border. Cyril Shroff is often referred to as one of the best corporate lawyers in India. He has represented many top business houses of India, including Reliance Industries, the Tata Group of companies, the Piramal Group, and many Fortune 500 companies in their India related matters..Role on the Deal .Cyril Shroff: “We represented Piramal as their Indian counsel but at the same time we were responsible for overseeing the international side of the transaction. Mintz Levin, a US law firm was engaged as the international/U.S. counsel. We closely worked with the Piramal team to guide them with this acquisition. We have a valued relationship with the client. I really enjoy working with Ajay Piramal. Ajay is a true M&A expert himself and great with decision making.”.Thoughts and interest in M&A deals.“M&A deals, by definition, bring about ’full creativity in form’. No two deals are alike. A good M&A lawyer really has to show a broad spectrum of skills, starting from contract and commercial knowledge, tax, merger control and human psychology in order to be able to do a good M&A transaction. M&A deals are never boring. M&A practice challenges you in the extreme and never becomes a commoditized practice.”.What goes into making a good M&A lawyer.“Young M&A lawyers need to keep the following in mind while doing M&A transactions:.First, invest a lot of time in understanding the deal and what is really happening, including how the assets and the money flow is going to be. This is usually what people don’t understand very clearly. So, the first step is to clearly have a deep understanding of the business and finance.Second, invest time and think about the risks involved or what could go wrong. A highly experienced M&A lawyer is effective in knowing and implementing strategies to reduce these risks.Third, understand and get a sense of what the personalities of the people involved in the deal are like and, cater your transaction structure and your transaction model to address the personalities of the parties involved on both sides.”.“All these qualities come with experience. So, the message to the young lawyer is to be thoughtful and observe. Every lawyer needs some sort of grooming and training and for this he needs to observe how his senior operates and then later go and venture out and do M&A transactions.”.Most interesting deal so far…..“I have done several M&A transactions and don’t want to be unfair to others by naming only few. Rather than getting into a specific deal, the most interesting deals have been where the personalities involved have been non-standard, where you are clearly trying to address the quarks of the transaction because of the individuals involved and create a transaction out of it. Those would be the most interesting ones and not the plain vanilla transactions.”.Main legal risks involved in M&A transaction .“The regulatory atmosphere for M&A deals, particularly cross border M&A has become very uncertain. There are tax risks and merger control risks. If there is a natural resource involved, despite all the diligence that you do, you always have the risk whether you are getting a good asset or can you be second guessed by a court or by some regulator later on..In India, apart from all the risk that you can discover in diligence, there is also a category of risk which you can almost never discover in diligence and how you are allocating that risk, if any of those situations were to arise is probably the most uncertain part of putting M&A transactions together..As a result of all this, what is happening is that at least medium to large size M&A deals are being done by mostly larger firms, which have the broader capability of addressing the full spectrum of issues because of the complexity involved.”.M&A practice of AMSS.“M&A practice is one of Amarchand’s foremost practices apart from capital market and financing. We have been involved both for Indian as well as foreign clients on several domestic as well as cross border deals and lot of restructuring as well. So, more than 100 professionals in the firm are only doing M&A. If all offices put together, more than 40 per cent of the firm is involved into M&A and private equity..On the league table, we have been doing very well in Asia-Pacific. It’s a steady flow of work. It is something, which has come together rather nicely by not only having the corporate lawyers, who lead our transactions but also bring in the support from our merger control, taxation, real estate and litigation practice. It is sort of a conglomerate where there is one deal in the middle but there is a lot of associated work including financing, etc. It keeps all our other practices quite busy. In summary, M&A practice is the flagship practice of the firm.”.Future trend of the M&A deals .“I expect a lot of M&A activity and comparatively a bit more inbound activity rather than outbound. I think two-third will be inbound transactions and one-third outbound even though the past trend shows that the ratio between inbound and outbound has been roughly equal. There are several reasons for this and one of the main reasons is the currency situation in the country. It has become cheaper for an offshore acquirer to buy an Indian asset and it has become significantly more expensive for Indian acquirers to buy foreign assets.”.Lastly, Impact of the government’s recent tax decision on cross border M&A transactions .“I think it has upset foreign investments because of the possibility of retrospective taxation. As a result what has happened is that parties are pricing this aspect into the transactions. So now they are just assuming the worst and just grossing up, effectively assuming the tax they have to pay. I don’t think it is really affecting the transactions in terms of transaction not happening. It is just being priced into the deal structure and deals are still going forward. Foreign investors are more concerned about certainty and they don’t like surprises.”