Law 

The COVID-19 pandemic did not put a stop to the M&A activities, says the Croatia Country Leader at Deloitte Legal

The COVID-19 pandemic has affected economies all around the world. Even though we often talk about a market slowdown, many business activities still go on, though not to such a degree as before. Mergers and acquisitions are no different in this regard. Tarja Krehić, the Croatia Country Leader at Deloitte Legal Croatia, who assists companies with M&A issues, knows something about that. In our short interview, she spoke not only about the current trends in this area but also about the specifics of the Croatian market or her early career at Deloitte.

Tarja, could you tell us a little bit about your background, please?

Well, this week is actually something of an anniversary for me. It is one year ago that I joined Deloitte Legal, and so far it has been quite amazing! Before joining the Deloitte Legal network, I ran my own M&A boutique law firm for almost ten years, assisting the leading international and Croatian companies with their activities on the regional market here. One specific area of strength in my practice was in the telecommunications and the ICT (Information & Communications Technology) industry, as I initially started my career at Croatian Telecom and studied this legal area at the US Duke University. Over the years, I built up a very pleasant and talented team of professionals, who were engaged in larger and larger deals. It seemed a logical step to take for us to then become a part of the Deloitte Legal network in order to be involved with the biggest Croatian corporate clients, and through Deloitte Legal, position ourselves as a top tier corporate law firm. It is worth mentioning that within the last year-I have managed to expand our team of excellent, ambitious and smart lawyers, with whom I really enjoy working in developing this new regional practice.

What do you do as Croatia Country Leader, Tarja?

Well, apart from the day to day management, I oversee our clients and prospective clients relations not only in Croatia, but also in Slovenia, and Bosnia, too. Being able to offer a “one-stop-shop” of Multi-Disciplinary Modules, which means integrated solutions with input not only from Legal, but also Tax, Financial Advisory, Consulting and Assurance, means we provide greater convenience and time-savings for our clients. With our extensive geographical presence, we can efficiently help companies based in Croatia, or global players with regional coverage.

Further, I should add that we are one of the very few regional Deloitte Legal offices which offers LMC (Legal Management Consulting). The demand for these premium and sophisticated services shows a high level of professionalism regarding compliance in our client’s corporate legal departments, across various industries. I believe it also shows their interest in using the latest technologies to improve their legal policies, and legal department functionality. Offering LMC, and the wider technology-based and compliance service packages, is something that really sets us apart, and makes us stand out from regional law firms as well as from local major players.

In your opinion, what are some of the more interesting areas of work that you are engaged in?

Well, it is difficult to know where to start, since there is a lot of very interesting and varied work that we do. One thing that comes to mind is that before joining Deloitte Legal, we provided quite limited Legal GDPR compliance assistance. Nowadays, however, together with the Deloitte Consulting and Forensics teams, we are able to offer more extensive GDPR compliance work – not only with Legal, but also with Cyber and Consulting aspects. Additionally, speaking again about the M&A deals, we work together, Legal, Tax, and Financial Advisory, in both the due diligence work, and the transactional advisory support, providing the client the efficiencies of a bundled service, which otherwise would have had to have been obtained from three different professional service providers.

And, I wonder, Tarja, are there any specifically new products, apart from those in LMC, that you can more easily offer to your clients, which are a result of the Deloitte Legal network co-operation?

The latest trend in M&A advisory, in the region, is to offer to both sellers and buyers of Croatian targets a special type of M&A insurance policies, called a Warranty Insurance Policy (WIP). The policy itself is not offered by Croatian insurers yet, but by UK and European insurance providers. What this means is that both the buyers and the sellers can enjoy peace of mind in their M&A deals as they have an insurance policy covering their liability for the deal. On the one hand, for sellers it is easier since they are no longer liable for years even after they close the deal, and for the buyers it is easier since they no longer need to worry about compensating for potential damages – they know that the insurance policy will be enforceable, and that they will get their money back in the worst case scenario.

What do you think are the trends in business in your market?

Well, what we see is that there is a very high level of activity in M&A in both the Croatian and regional markets. This is especially the case in the ICT and production industry. At a general level, it appears that a number of Croatian companies have now reached the point where they are becoming attractive for strategic partners, or private equity investors, as they are generating profit. It has taken them 10-30 years to reach this level of maturity, but now they are at this level, they seek strategic, or financial, investors in order to properly structure themselves, properly implement ESOP programs and then to go public. Notably these will not be IPOs made in Croatia, but in London or New York. Thus, even in this pandemic time, these M&A transactions go on, because many of the banks do have quite a lot of funds available to invest, and the interest rates remain low. One other reason for this increase in M&A activity is that in the pandemic time the buyers find themselves in a good negotiating position; So, for those able to invest, and to buy targets, there are some excellent opportunities available.

That’s great, Tarja! Thank you for your time.

Thank you, James.

Is your company facing challenging times and are you considering important transactions or restructuring steps? If so, do not hesitate to contact our experts from the Deloitte M&A team who will be happy to help.

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