THE COMMERCIAL YEAR 2016-17
Commercial awareness – that skill so prized by the firms which feature in these pages – means knowing what your client wants to achieve and how to use the law to do it. For experienced lawyers, this requires a strong understanding of the sector in which the client operates. While firms don’t expect those entering the profession to be experts, they do increasingly look for candidates with an active interest in the wider world of commerce and a common-sense understanding of what businesses do, as well as how their activities intersect with politics, social concerns and pretty much all other human activity. Below we recap some important commercial stories of the last year to provide you with a basis for thinking like a lawyer in the months ahead. Brexit Britain’s exit from the European Union is set to remain one of the most important issues for UK businesses for the next decade and beyond. Negotiations between EU and UK officials over the exit terms began in June 2017, but many fundamental questions still remain unanswered. There is still a debate about whether the country should pursue a hard Brexit – cutting ties with the European Union and seeking to replace lost EU trade by boosting trade elsewhere in the world – or a soft Brexit, where Britain accepts certain EU conditions to remain in the single market and customs union. In a report by the former shadow chancellor Ed Balls and Harvard University senior fellow Peter Sands, business leaders and academics warned that hard Brexit would be
disastrous for Britain’s prosperity. The report observed that the United Kingdom already has strong trading links with non-EU countries, so any moderate strengthening in these areas is highly unlikely to compensate for losing free access to European markets. Meanwhile Lloyd Blankfein, chief executive of Goldman Sachs, one of the world’s largest investment banks, revealed in May that his firm was making “contingency plans” to move its 6,500-strong UK workforce out of the country if negotiations end with hard Brexit. The devaluing of the pound following the EU referendum has further squeezed consumers, with wages failing to keep up with the rising cost of imported goods – June saw UK inflation reach a four-year high of almost 3%. In response, some household brands, including Doritos, Toblerone and Coco Pops, have adopted ‘shrinkflation’ – freezing the price of products but reducing the size. Elsewhere, the weak pound created difficulties for farmers by making fruit picking a less attractive proposition for the low-paid migrant workers on which British agriculture relies. Some growers reported having insufficient workers to harvest their crops. over Brexit, law firms’ mergers and acquisitions (M&A) teams have been kept busy. Among the big deals of 2017 was the purchase of Holland & Barrett, the United Kingdom’s biggest health food retailer, by Russian businessman Mikhail Fridman for £1.8 billion. Fridman’s fund, L1 Retail, has promised significant investment in the business, so Holland & Barrett’s star could rise further in the year ahead. Another British success story is that of craft beer maker Brew Dog, which sold a 22% stake in its business to a private equity firm in April for £213 million, £100 million of which will be reinvested in the company’s M&A Even with so much uncertainty
growth. While private equity may not fit the ‘punk’ aesthetic cultivated by Brew Dog as part of its brand, the deal means that we can expect more of its idiosyncratically named booze to appear on supermarket shelves. However, not every acquisition in 2017 went smoothly. In fact one of the biggest – the proposed £21 billion merger between the London Stock Exchange and its German rival Deutsche Börse – was blocked by the European Commission on the grounds that it would create “a de facto monopoly”. The EU competition regulator’s decision marked the end of a third unsuccessful attempt at a merger between LSE Group, which owns the London Stock Exchange, and Deutsche Börse, with previous efforts scuppered in 2000 and 2005. Rupert Murdoch’s 21st Century Fox has also faced difficulties in its latest attempt to take over full control of the subscription broadcaster Sky. The regulator Ofcom expressed concern that the deal would have a profoundly negative impact on media plurality in Britain by giving the Murdoch family even more influence over UK news and politics (Murdoch already owns The Sun , The Times , Fox and a large stake in Sky, and previously owned the now-defunct News of the World ). Culture Secretary Karen Bradley bowed to pressure to some extent by referring the deal to the Competition and Markets Authority, which is conducting a six-month review. However, due to allegations of influence that Murdoch has enjoyed over successive prime ministers and other prominent politicians, critics remain wary that a “grubby deal” over Sky could yet take place. Banking The consequences of the 2008 financial crisis (caused by reckless banking practices relying on dodgy financial instruments) continue to be felt across the financial sector nearly a decade on, as well as among the wider public. One of the year’s most important
64
Best in Law 2017
LawCareers.Net
Made with FlippingBook - Online magazine maker