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Editorial

UK M&A continued to feel the effects of global volatility and the eurozone’s sovereign debt crisis, with reported deal values in 2012 down 66% on the heady days of 2007. Year on year, UK M&A saw a 5.1% increase compared to 2011, with the energy, mining and utilities sectors proving to be the most active. Inward foreign investment accounted for the lion’s share of UK M&A in 2012, and the BRIC nations are still outperforming the eurozone economies in terms of levels of M&A, with law firms with strong global platforms continuing to leverage that capability to chase down deals. London remains strategically important to US law firms doing deals in Europe and beyond, as evidenced by the recent spate of lateral hires from the Magic Circle. The picture for 2013 remains uncertain; although the first quarter saw an increase in value compared to Q1 2012, deal count was down.

On the private equity front, strong high yield markets in the US and alternative debt streams are the key drivers, although the heightened activity in the US has not had the trickle-down effect into UK private equity that some have predicted. Mega-deal activity remains muted, which has seen even the largest private equity players look to the mid-market, and secondary buyouts and portfolio management are driving the practices at many law firms. 2012 and 2013 saw several high-profile lateral hires by US firms from major private equity powerhouses such as Clifford Chance, partly motivated by a desire to shore up their global relationships with their established US-based sponsor clients.

2012 was a patchy year for capital markets. With low volumes of activity overall, secondary offerings drove much of the work for lawyers, and large IPOs were few and far between; highlights included the £2.6bn IPO of Direct Line Insurance at the beginning of 2012, and the $1.7bn flotation of Russian mobile phone operator Megafon. Law firms saw a number of anticipated offerings fall through at the last hurdle, often because of volatility in the markets. This volatility has now eased somewhat, giving grounds for some optimism for the year ahead. The energy and mining sectors remained buoyant throughout 2012, although softening commodity prices may cause activity levels to drop.

The corporate tax space saw a high level of regulatory change in 2012, against a background of increased media and public focus on the tax affairs of large multinational groups. Clients are now keener than ever to minimise any reputational risks associated with tax planning, and this has translated into more direct involvement for law firms in tax matters at the board level.

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Legal Developments in London for Overview

Legal Developments in the UK

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  • Home Office announces extension of support service for SMEs

    An online support service for small and medium sized businesses (SMEs) which need to recruit skilled overseas workers has been extended until 28 February 2014. The pilot was launched by UK Visas & Immigration (UKVI) in partnership with the Greater London Authority (GLA) and provides a step by step guide to sponsoring an overseas worker. This service is available via the GLA website.
  • Penningtons Manches' immigration team considers new changes to the Tier 4 Sponsor Guidance

    The Home Office has recently published new Tier 4 Sponsor Guidance, version 12/13. This guidance is to be used by all prospective and existing Tier 4 sponsors from 11 December 2013.
  • Finding the 
right words

    In the recent case of Newbury v Sun Microsystems [2013], the defendant argued that an offer to settle proceedings was ‘in principle' only and that a binding contract could not be formed until further terms had been agreed and a formal contract had been signed. It supported this argument by referring to a statement, in the offer letter, that the settlement was to be ‘recorded in a suitably worded agreement'. 

  • Behind the corporate veil: is that all there is?

    That companies have an existence entirely separate to that of their shareholders and directors is a foundational principle of English law and commerce.

  • Playing fair with penalty clauses

    It is often difficult to predict what will be recoverable as damages for breach of contract. To provide some certainty, parties will often seek to agree the sum that will be payable in the event of specified breaches. 

  • Restoring environmental damage: putting a price on ecosystem services

    On 7 August 2009 a 40-inch pipeline ruptured, spilling 5,400 cubic metres of crude oil into the soil and groundwater of La Crau nature reserve in southern France, a habitat protected under French and European law. The operator had to excavate and replace 60,000 tons of soil, install 70 wells to pump and treat groundwater and 25 pumps to skim oil from surface water, at a cost in the region of €50m. However, this was just the primary remediation (that is, restoring the site to the state it would have been if the damage had not occurred). The operator was also required to compensate for the damage to the habitats and the loss of the ecosystem services that would otherwise have been provided by La Crau nature reserve. Measures included purchasing land outside of the nature reserve and contributing to its management for a period of 30 years (over €1m), monitoring the water table for 20 years (over €500,000), monitoring fauna over three years (€150,000) and rehabilitation in accordance with best available ecological techniques (nearly €2m). Overall, the compensatory restoration (to compensate for the amount of time that the ecosystem was impacted) and complimentary restoration (to compensate for elements of the ecosystem that had been permanently lost) came to more than €6.5m. 

  • The role of arbitrators in EU antitrust law

    In May 2014, it will be ten years since Regulation No 1/2003 entered into force. When the legislator of the European Union adopted this Regulation on 16 December 2002, its main objective was to decentralise the enforcement of the two main provisions of EU antitrust law, Articles 81 and 82 of the Treaty establishing the European Community (now Articles 101 and 102 of the Treaty on the Functioning of the European Union (TFEU)). Where do the arbitrators fit in this picture?

  • New Immigration Bill, October 2013: cause for concern or appeasing public sentiment?

    The year 2013 has seen a string of reforms to the immigration system by the current coalition government. On 10 October, the government published a Bill aimed at continuing its drive to reduce net migration figures. 

  • New Schengen EU Regulations: impact on short-stay visa visitors

    The publication on 26 June 2013 of the European Union Regulation EU 610/2013 modified the incumbent Regulation EU 562/2006 in relation to third country nationals (ie non-EU citizens) and those travelling on a short-stay visitor visa, as well as those who do not require a visa to enter the Schengen area, Romania, Croatia and Bulgaria. Exceptions include EU and EEA nationals travelling to other EU/EEA states within the Schengen area together with foreign nationals holding either long-stay or residence permits for their destination Schengen countries.

  • New revised guidelines for administrators in pre-pack sales

    Pre-pack sales by administrators are now used frequently enough for most people in business to be aware of them and many have come across them in their business lives. A small amount of controversy still attaches to pre-packs, but it is probably right to say that they are now an accepted part of the UK business scene as a useful means of rescuing a business in difficulty and preserving some or all of the jobs connected with the business.
    - Druces

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