Dealmaker Q&A

Posted on

TTR DealMaker Q&A with Clifford Chance Partner Guillermo Guardia

Guillermo Guardia – Clifford Chance (Barcelona office)

Law degree from Universidad de Barcelona (1996).
Guillermo joined Clifford Chance in January 2000 and has an extensive experience in international mergers and acquisitions, private-equity and joint-venture transactions.
He has also advised several national and international financial institutions and corporations on acquisition finance, corporate financing and project finance transactions both in the energy and in the infrastructure sector. In 2007 he was seconded to the Private Equity Group of the London office of Clifford Chance. 
Lecturer at the Law Faculty of the Universidad de Barcelona.
Ranked in Chambers & Partners.

TTR: M&A activity was very strong in Spain in early 2020, but things changed considerably by the close of 1Q20. How would you describe the current situation in the transactional market in Spain? 

G. G.: We are facing an unprecedented situation in all areas, and M&A is no exception. 

We cannot apply a market situation reading across all sectors, since many of them are facing very different situations. While certain sectors, such as renewables, telecoms and healthcare, are seeing a boom in transactions and are clearly in a phase of expansion, others are focusing on reordering or consolidating their activities in order to increase their profitability at medium and long term. There is also a third group, the most damaged by the health crisis, in which distress sales are becoming ever more frequent. 

This is probably one of the most striking aspects of the current situation, since in other times of changing circumstances, all sectors have generally experienced the same situation of crisis or expansion. 

TTR: What is the current situation in Spain and what are the prospects for the coming months where corporate restructurings are concerned? 

G. G.: The health crisis took many companies by surprise, and those most affected have had to obtain immediate liquidity facilities. As the year has gone on, more and more companies have had to restructure their debt at short and medium term and offer certain non-core business units for sale. 

We believe that this trend will continue into at least the first half of 2021. 

TTR: Clifford Chance has advised numerous renewable energy transactions in 2020. How do you explain the strong deal volume in this segment and what opportunities have you come across in recent months within this context? What factors will need to coincide for this trend to hold in the medium-to-long term? 

G. G.: The renewable energy sector has indeed demonstrated extraordinary resilience in the current circumstances, and Clifford Chance has advised on numerous transactions, both in relation to assets under development and the purchase and sale of consolidated projects on the secondary market. 

A fundamental factor in this situation is the enormous liquidity present in the market. There are other factors that have buoyed the sector, however, such as a regulatory framework that fosters legal certainty and contractual instruments that ensure a project’s credit quality. 

Renewable and efficient energy technologies will be one of the largest beneficiaries of the EU funds earmarked to alleviate the Covid-19 crisis. To the extent that the markets’ liquidity remains stable, this will continue to be a particularly active sector at medium and long term. 

TTR: Which three sectors do you expect to be most attractive to investors with firepower in 4Q20 and early 2021? 

G. G.: In addition to renewables, as mentioned above, we would highlight the healthcare and infrastructure sectors. 

We believe that there are various factors at work in the healthcare sector that will allow for significant transactional activity in the future. First of all, the consolidation of the trend towards specialisation and segmentation among the major Spanish pharma companies. This will lead to sales of non-core assets (typically the division of generics and manufacturing for third parties) as well as strategic acquisitions of product portfolios. To this must be added the greater interest in the healthcare sector among private equity funds. We believe that private capital will be an increasingly important player in the sector over the next few years. 

The infrastructure industry, meanwhile, which has been very active in 2020 despite the health crisis, is beginning to show signs of slowing down, which could have a 

decisive impact in 2021. While demand remains stable and funds continue to show interest in investing in this type of asset, the problem could come from the supply side. Tenders for new infrastructure projects have been decreasing substantially over the last few years, which will inevitably lead to fewer assets available to investors or to lower-quality assets. 

TTR: Which regulatory measures could help the Spanish M&A market recover more quickly? 

G. G.: One measure that would doubtless aid in the recovery of the M&A market would be the revision of legislation on foreign investment. The changes introduced in this area create a lot of doubt among international investors, and it would of course be helpful to devise a clear, effective and transparent system. We believe that certain areas for improvement have become clear since this legislation came into force. 

Second, the administration should take advantage of the EU’s Recovery and Resilience Facility to drive investment in new infrastructure projects in the sustainable mobility, water and environment and health areas.

DealMaker Q&A

Posted on

TTR DealMaker Q&A with Cuatrecasas Partner Federico Roig

This image has an empty alt attribute; its file name is FRG_Federico-Roig_TTR-983x1024.png

Federico Roig – Cuatrecasas

Federico Roig es socio de la práctica de Corporate M&A de Cuatrecasas. Es especialista en derecho mercantil, en particular en el campo de fusiones y adquisiciones, private equity, acuerdos de joint venture, restructuraciones de grupos societarios y asesoramiento contractual. Destaca su experiencia en el sector industrial, con particular relevancia dentro del campo de la energía, transporte e infraestructuras.

TTR – La actividad de fusiones y adquisiciones en 2020 al parecer se ve afectada por la crisis de salud del COVID-19. ¿Cómo describiría la situación actual del mercado de fusiones y adquisiciones en España?

F.R. – El impacto del Covid- 19 ha sido severo en el mercado de M&A en Iberia tanto en volumen como en valor de las operaciones, con caídas de doble dígito en ambos parámetros. Sin embargo, dicho impacto ha sido desigual en función del sector de actividad y del tipo de inversor.

Así, los sectores más castigados por la crisis de la pandemia han sido el turismo, transporte aéreo y hoteles/hostelería, afectando muy especialmente a todo el sector de SME’s (Pymes).

Sin embargo otros sectores han resistido mejor la crisis tales como el sector de telecomunicaciones y energía. 

En cuanto al tipo de inversor, hemos visto como los fondos de private equity (PEQ) se concentraban en la defensa de sus portafolios durante la primera mitad del año y, sin embargo, aumentaba la liquidez disponible en el mercado con el levantamiento de nuevos fondos durante el mismo periodo (por  importe de unos  50.000 millones para inversión en España, según información pública reciente).

TTR – Cuatrecasas, al ser uno de los líderes del asesoramiento en M&A en España según nuestro ranking legal TTR: ¿Cómo ha manejado la crisis actual en términos de asesoramiento y qué oportunidades han encontrado en los últimos meses a través de la coyuntura en España?

F.R. – A pesar de que el impacto del COVID-19 se ha hecho notar en casi toda la actividad de M&A, en el despacho hemos estado muy ocupados durante el año y vemos un repunte de actividad en este segundo semestre.

Nuestra actividad se ha concentrado, especialmente, en operaciones de M&A en el sector de la energía y en el asesoramiento recurrente en reestructuraciones y renegociación de contratos suscritos por las compañías dentro de los portafolios de nuestros clientes, seriamente afectados por el impacto del Covid-19.  En este sentido hemos notado un claro incremento de la actividad de M&A tras la vuelta del verano.

TTR – ¿Como luce el panorama de M&A en España para el cuarto trimestre e inicios de 2021? Cuáles sectores podrían brindar mayores oportunidades a inversores con potencial financiero?

F.R. – Todavía quedan meses por delante donde el impacto del Covid-19 se hará sentir, así que es difícil saber lo que pasará en los próximos meses y año 2021. 

Tenemos que ser cautos pero creo que las actividades de M&A irá recuperándose poco a poco y seguiremos viendo movimiento y operaciones relevantes en el campo de la energía (en particular en renovables) y en PEQ, por esa liquidez que existe en el mercado y antes comentaba y que debe invertirse en empresas con potencial de crecimiento. Estamos viendo además cómo los operadores de M&A empiezan a ajustar las valoraciones y eso es siempre un catalizador de nuevas operaciones.

Tampoco hay que olvidar el proceso de consolidación en ciertos sectores como las telecomunicaciones y la banca, que pueden impulsar nuevas operaciones corporativas en el sector, aunque serán operaciones más puntuales y de mayor tamaño.

TTR – En cuanto a reestructuraciones societarias, ¿cuál es la situación actual y cuáles son las perspectivas para los próximos meses en España?

F.R. – Si hay un sector que, como consecuencia de la pandemia del COVID-19,  ha estado especialmente activo durante este año 2020 ese ha sido el de las reestructuraciones corporativas y de deuda.

 La crisis sanitaria supuso que se formara una “tormenta perfecta” en aquellas compañías con niveles altos de deuda que vieron cómo, de la manera más abrupta,  se recortaban sus ingresos, al mismo tiempo que los bancos restringían y endurecían la disponibilidad de líneas de circulante, secando así la liquidez de muchas compañías que se han visto obligadas a renegociar deuda y reestructurar su pasivo para asegurar su subsistencia.

Esta situación se mantiene en la actualidad y veremos incrementar la actividad en este campo en el próximo año. 

TTR – ¿Cómo describiría las medidas tomadas por el Gobierno español para sobrellevar la crisis empresarial provocada por el impacto de la lucha contra COVID-19? ¿Qué otras medidas se necesitan en el corto plazo para asegurar la recuperación económica?

F.R. – El Gobierno ha puesto en marcha determinadas medidas, como los avales y medidas de financiación a través del ICO, que pueden ser un estímulo importante para la maltrecha situación de muchas empresas en España. 

La clave de estos programas de apoyo financiero va a estar en los mecanismos de asignación de los recursos disponibles, que deberían ser ágiles y, sobre todo, destinados a inversión productiva, sabiendo distinguir entre aquellas empresas generadoras de empleo respecto de aquellas otras con poca o nula viabilidad en el medio/largo plazo.

En este sentido creo que, además de ayudas financieras directas como las antes mencionadas, sería necesario impulsar medidas más estructurales, tales como moratorias o reducción de pago de impuestos y cotizaciones a la SS para las  empresas, que son al final el motor de generación de empleo más eficaz.

DealMaker Q&A

Posted on

TTR DealMaker Q&A with Ramón y Cajal Abogados Partner Amado Giménez Bono

Amado Giménez Bono is partner within the banking & finance department at Ramón y Cajal Abogados. His practice encompasses almost all aspects of finance transactions including debt restructuring and refinancing (over 100 deals) during his career, structured corporate finance, project finance (renewable energy, water, and infrastructure) LBOs and MBO´s. He regularly advises main Spain banks and financial institutions, as well as debt funds, advising also listed and unlisted companies/sponsors

TTR – In terms of company restructurings, what is the current situation and what are the prospects for the following months?

A.G.- It seems that the measures taken by Public Authorities in terms of elapsing insolvency  periods is letting companies take time to evaluate their situation prior to making a decision as to filing for bankruptcy or a pre-insolvency scheme or not. 

Despite such measures, there is still a number of companies struggling to survive that have more concerns than just the insolvency liability periods being suspended/extended, thus liquidity constraints derived from stopped activity and income are blocking their businesses.  Liquidity introduced via State Guarantee schemes seem to have been useful but there is a general feeling that such measures are only a starting point of a long and tough journey.

We anticipate a very heavy work load for the upcoming months in terms of restructuring deals.

TTR – What type of companies has been more affected by COVID-19?

A.G.- Tourism (in a wide sense, hostelry, restoration, etc.), automotive components, and in general all sectors that depend on a physical presence for trade to produce, such as retail for instance. 

TTR – How would you describe the measures taken by the Spanish Government to weather the business crisis caused by COVID-19? Do you think additional measures are needed?

A.G.- As described above, the measures taken so far seem to have given relief to the first wave, but a clear picture of the effects of the Covid-19 Pandemic seems yet to come; so it is difficult to evaluate the accuracy of such measures. 

State Guarantee schemes have proven to be useful in a first stage (although its implementation in the beginning was not as smooth as desired), but increasing debt levels may not be a solution itself in the long run for businesses that have been literally closed for weeks.

Let´s see how political negotiations take place and how the EU bazooka is channeled into the Spanish economy/companies.

TTR – Regarding the M&A sector, do you think the health crisis has generated business opportunities? Which sectors do you think are more interesting for financially strong investors?

A.G.- It seems that the green energy industry is going to take an important role in the post-pandemic Spanish M&A scheme, but I guess not the only one.  It will depend, at a first stage, whom will be the first one in put price to certain assets. 

DealMaker Q&A

Posted on

TTR DealMaker Q&A with IMAP Albia Capital Partner Alejandro Azcona

Alejandro Azcona – IMAP Albia Capital: Graduate in Economic and Business Sciences, specialising in finance, CIA from the IIA, Florida. He started his career at ARTHUR ANDERSEN and then he joined the IBERDROLA GROUP. In 2004, as a result of his enterpreneurial spirit, he founded IMAP – Albia Capital and since then, he has executed more than 25 sell-side, buy-side or capital raising projects and has participated in 30 Valuation, Restructuring, Refinancing and Feasibility Plans, especially in energy and renewable energy, manufacturing, automotive, food and wine, services and Private Equity.

TTR – How would you describe the current situation of the Spanish M&A market? Have we already overcome the uncertainty caused by the COVID-19 health crisis?

A. A. – The M&A market is currently going through a period of adjustment to the new situation that has arisen as a consequence of the health emergency that we have all had to live through. 

Certain sectors that have emerged stronger out of this crisis, or that have been less affected by it, such as technology, healthcare, or food, remain active in M&A terms, their market and profitability have grown, and their corporate dynamics are in some cases even better than before. 

In other sectors, the ongoing uncertainty that still remains regarding the size of the residual market that businesses will have left makes standard M&A transactions difficult, although we believe that this will be an incentive for business-consolidation transactions in the medium term. 

TTR – Is there investor appetite in the market at the moment? Would you say market opportunities have arisen from the standstill caused by COVID-19?

A. A. – Yes, there is an appetite for investment and there is liquidity in the market, although positions have changed compared to just before the crisis. 

The risk inherent to the current situation has significantly increased, and this means that the judgments made by buyers are more conservative, but likewise sellers are also more sensitive to the risk-exposure of their businesses, both because of what we have been through and because of the uncertainty in the short to medium term. 

This context gives rise to interesting investment opportunities, and as we were saying earlier, there is a clear opportunity to boost sectoral consolidations that improve the competitiveness of the business fabric while at the same time generating attractive and profitable projects. 

TTR – Is it a good moment in terms of access to financing? 

A. A. – The promotion by various government bodies of a range of different instruments to ensure that businesses can retain liquidity, with guarantees of different kinds for lending institutions, has given rise to a period when it has been relatively simple to secure long-term financing under favourable conditions. 

The lesson we learned during the 2008 – 2012 period has meant that the majority of businesses are building up liquidity that will allow them to face the short-term with greater security. 

The situation may change in the coming months, when the government-backed instruments start to taper away and the balance sheets and trading accounts of the financial institutions start to feel the impact of the crisis. When this happens, it is quite likely that credit will dry up significantly, and as such this is clearly the time to access borrowing. 

TTR – Which regulatory measures do you think would help the Spanish M&A market recover more quickly?

A. A. – In order for the M&A market to recover more quickly, the most important thing is for businesses to recover quickly, for the outlook to be good, and for them to have investment capacity and the ambition to grow and develop. Therefore, all regulatory aspects that support the flexibility of business costs in order to adapt to the new market and support the recovery and the improvement of business prospects will make a significant contribution to boosting M&A. 

TTR – How do you expect the M&A market to behave in 2H20 and in 2021?

A. A. – For the remainder of 2020 we are expecting – and are indeed already seeing – an active market in technology-related transactions, both in development projects and in the acquisition of technology by large corporations and in markets that have been winners in the situation we have endured. We are also expecting a volume of opportunistic transactions borne out of the uncertainty, as well as consolidation processes by competitors within the same sector. For 2021 we are expecting an overall economic recovery, which for those companies that have adapted well to the new situation will improve their prospects and their profitability, and will lead to a progressive normalization of the market and of M&A transaction

DealMaker Q&A

Posted on

TTR DealMaker Q&A with Rivero & Gustafson Abogados Partner John R. Gustafson

John R. Gustafson – Rivero & Gustafson Abogados: Corporate and Commercial Law, Litigation, Arbitration and New Technologies.

Graduated at the San Pablo C.E.U./Universidad Complutense (Madrid, 1988), John initiated his professional career at the Public Defender’s Office of Albany, New York, and later joined Baker & McKenzie (1991).

TTR – The M&A activity in 2020 is severely affected by the COVID-19 health crisis. How would you describe the situation of the M&A players in Spain at this time?

J. R. G. – Undoubtedly , the current backdrop is not the most conducive to the development and conclusion of operations in the transaction sector. Alongside the adverse consequences of the actual crisis and the uncertainty of its evolution in the short and medium-term, we must also add the purely logistical issues inherent in lockdown itself. With few exceptions, praise must be given for the difficulty that closing transactions entails in this context, the outlook suggests that most transactions are undergoing a sort of hibernation period and waiting for the “storm to pass”.

TTR – Which sectors would you say are more affected by this situation? Which ones do you think are most likely to recover more quickly?

J. R. G. – The most part of all sectors are feeling the effects to a greater or lesser extent. The service sector has a major bearing on the Spanish economy and is being one of the most severely punished, notably in the spheres of transport, hostelry, tourism, leisure and entertainment in which it has been necessary to cease trading under the current circumstances. These are the very sectors that should experience a swifter recovery due partly to having fallen so sharply. Likewise, the healthcare, pharmaceutical, medical and geriatric treatments spheres will awaken the interests of investors to tackle further outbreaks and remedy weaknesses identified during the lowest points of the epidemic.

TTR – What regulatory measures do you think could be deployed to unblock the current situation?

J. R. G. – All aspects that involve boosting the economic flow of investment and endowing flexibility to the markets will lead to benefits in terms of recovery. Admittedly, now is not the time to raise taxes and legislate towards more rigidity in the employment market, moreover the opposite is true. Backing must be given to investment, research and development, along with reforms.

TTR – What is the situation of the M&A market in Spain compared to other nearby countries? Is this stagnation being lived in the same way in other countries?

J. R. G. – Our insight is that activity in Europe and North America is on a very similar footing. The million-dollar question is whether once the progressive de- escalation comes into being, will we be able to advance at the same pace as those best prepared for the future?

TTR – What should we expect in the following months? Do you believe it is still possible to get back to normal in 2020?

J. R. G. – A situation of major downturn in activity is often followed by another of intense activity. I believe that in this case the recovery of activities will take place more progressively. There will be operators who seek out opportunities that will be undoubtedly the result of this crisis, yet the general economic environment will remain troublesome. Everything makes us think that we will have to coexist with this scenario for a while and adapt to the circumstances. It is somewhat difficult to contemplate presently the return to what we have understood as being normal until mid-March, yet that is the direction in which we must move.

Versión en español

John R. Gustafson – Rivero & Gustafson Abogados: Derecho Mercantil, Procesal, Arbitraje y Nuevas Tecnologías.

Licenciado en Derecho por la Universidad San Pablo C.E.U./Universidad Complutense de Madrid (1988) y Doctorando en Derecho Mercantil por la Universidad Autónoma de Madrid, comenzó su andadura profesional en la Oficina del Defensor Público de Albany, Nueva York y después se incorporó a Baker & McKenzie (1991). Ha sido profesor de Contratación Internacional del Instituto de Empresa en el programa Master of International Practice.

TTR – La actividad transaccional en 2020 está sin duda muy marcada por la crisis sanitaria del COVID-19, ¿cómo describiría la situación de los players del mercado transaccional en España estos momentos?

J. R. G. -Ciertamente el entorno no es el mas propicio para el desarrollo y conclusión de operaciones en el sector transaccional. A las consecuencias adversas de la propia crisis e incertidumbre de su evolución a corto medio plazo hay que añadir las puramente logísticas propias del confinamiento. Salvo contadas excepciones, que hay que alabar por la dificultad que entraña cerrar transacciones en este contexto, la percepción es de una suerte de hibernación en la mayoría de los operadores que aguardan a que “pase el temporal”.

TTR – ¿Qué sectores diría usted que se han visto más afectados por esta situación? ¿Cuáles experimentarán una recuperación más rápida?

J. R. G. -La gran mayoría de los sectores se están viendo afectados en mayor o menor medida. El sector servicios con gran peso en la economía española, es uno de los más castigados con especial incidencia en transporte, hostelería, turismo, ocio y entretenimiento que se han visto forzados a dejar de operar en las circunstancias actuales. Estos mismos sectores deberían ser los que experimentaran una recuperación más rápida porque parte de un umbral de caída también muy pronunciada. Del mismo modo el sector salud, farmacéutico, atención sanitaria y geriátrica despertará el interés de inversores en previsión de rebrotes y subsanar debilidades identificadas durante lo peor de la pandemia.

TTR – ¿Qué medidas cree que podrían tomarse a nivel regulatorio para desatascar esta paralización?

J. R. G. -Todo lo que implique incentivar el flujo económico de la inversión y dotar de flexibilidad a los mercados redundará en beneficio de la recuperación. Desde luego no es éste el momento de subir impuestos y legislar hacia la rigidez del mercado de trabajo, sino todo lo contrario. Hay que apostar por la inversión, la innovación, la investigación y el desarrollo. Reformas.

TTR – ¿En qué situación se encuentra España respecto a la actividad transaccional de otros países de su entorno? ¿Esta paralización que vivimos se traslada de igual manera a otros países?

J. R. G. -Nuestra percepción es que la actividad en Europa y Norteamérica está en rangos muy similares. La pregunta del millón es si una vez iniciada la progresiva desescalada seremos capaces de avanzar a la misma velocidad que los más preparados.

TTR – ¿Qué cabe esperar que suceda en los próximos meses? ¿cree usted que se podrá recuperar la normalidad en 2020?

A una situación de fuerte caída en la actividad suele seguir una de actividad intensa. Creo que en este caso la recuperación de la actividad tendrá lugar más progresivamente. Habrá operadores buscando oportunidades que sin duda dejará tras de sí esta crisis, pero el entorno económico general seguirá siendo complicado. Todo hace pensar que tendremos que convivir con este entorno durante un tiempo y adaptarnos a las circunstancias. Es difícil contemplar, a día de hoy, un retorno a lo que hemos entendido como normalidad hasta mediados del pasado mes de marzo, pero en esa dirección debemos ir.