Belarus M&A Deal Points Study 2019
Ten leading Belarusian law firms (including Sorainen, the Belarusian member of WTS Global) have jointly conducted major research into the Belarusian M&A market – the Belarus M&A Deal Points Study. The results of the project shed light on typical features of M&A transactions in Belarus along with specifics of the transaction process, including general provisions of an acquisition contract. The project drew on the experience of the previous study conducted in 2010, as well as other similar projects in various jurisdictions.
The current study was based on information regarding 59 transactions featuring the following characteristics:
- Belarusian targets only;
- Deal value of at least EUR 500,000;
- Closing between 1 January 2016 and 31 December 2018.
The data gathered covers most of the significant M&A transactions in Belarus. Although some of the actual transactions were completed without an external legal advisor and thus could not be reported, these unreported transactions should not have a significant impact on the results of the study. The same applies to the transactions which were not disclosed for confidentiality reasons.
The study showed that the most active sectors for M&A in Belarus are technology, food processing & agriculture, as well as construction & real estate. M&A activity is also notable in the retail & wholesale sector, which, in fact, may actually take 3rd place if several unreported transactions are taken into consideration.
Most transactions have a foreign element, while only 14% of the deals are purely local, i.e. only involving Belarusian sellers and buyers. For most of the cases, the buyers and sellers are classified as strategic investors.
Predominantly the transactions do not involve a tender, and last for 3-12 months. Almost all transactions are structured as share transfers featuring the acquisition of a majority share as the target.
While acquisition contracts are mainly governed by Belarusian law, it is not uncommon for the parties to apply the law of foreign jurisdictions, especially England. The latter is also used for shareholder agreements that might be concluded with regard to a transaction. The significant use of English law is partially due to the high number of EBRD projects in Belarus.
The purchase price tends to stay below EUR 25 million, with a slight increase in the number of transactions in the range of EUR 1-5 million. The purchase price is usually paid as a lump-sum or is significantly deferred. The payment mechanisms in Belarusian M&A contracts comprise the infrequent use of adjustments and other share price corrections, i.e. the share price is fixed and is not subject to change.
M&A transactions in Belarus are relatively straightforward overall, and in most cases do not require complicated structures and processes. Moreover, a number of local practices and requirements might even seem outdated to some extent, which from time to time creates complications when negotiating the terms of acquisition contracts. On the other hand, these complications are almost always surmountable, and do not prevent transactions from being completed.
Further results of the study are available in the report.