As M&A activity hots up, India Inc rushes to hire top lawyers
February, 24th 2016
Demand is on the rise for lawyers specialising in mergers and acquisitions, as the M&A market remains hot in India and companies aim to create mini in-house law firms to cut cost. In the past six months to a year, there has been a 40-45% increase in demand for M&A lawyers in the country, with the salaries of top executives ranging from .`1.5 crore to .`3 crore, say job market experts.
Increasing M&A opportunities within and outside India are prompting companies in sectors such as pharmaceuticals, infrastructure and core manufacturing, as well as big conglomerates, to hire top talent to deal with the legal intricacies of deals. Some of the senior-level hires in the past six months include Kallol Das, lead head of global M&A at Cipla who joined the drug maker in November from Brand Capital; VR Shankar, president of corporate legal affairs at Aditya Birla Group who previously worked at PepsiCo India; Shantanu Mukherjee, who joined Lupin in December as head of legal affairs and global M&A; and Christopher Krishnamoorthy, who is senior general manager and head of M&A at M&M since mid-2015.
"We have seen an increase in demand for M&A lawyers over the last six to 12 months as an in-house person gives companies huge cost benefit than outsourcing the work to outside law firms," said Anuja Bose, consultant at Vahura.
"Also, there is a strategic value that an in-house person brings with his understanding of the business that adds value to the deal, something which cannot be outsourced to a law firm." This is also part of a strategy to structure in-house teams as mini law firms, with specialists in functions such as M&A, litigation, regulatory and compliance.
This helps companies to both save cost and make the processes more efficient. There is an opportunity for companies to look at more focused expertise in the legal function of the M&A vertical, said Prabir Jha, global chief people officer at Cipla. "This is particularly true for the ones looking at M&A as part of the group strategy."
This is going to be more relevant in more mature organisations that see it as a part of directional strategy and feel it is good absorbing the cost than outsourcing the work to law firms, he said. The growing demand for legal talent is also a result of increasing M&A activity in India. According to Mergermarket data, India saw 409 deals with a combine valuation of $35.9 billion in 2015, with the average deal valuing at $87.8 million. It expects deal activity in India to remain high this year, too.
"Looking at the year ahead, as India has the potential to replace China in terms of the fastest GDP growth, inbound investment into the country will continue to flow," a Mergermarket report said. "In light of the recently announced budget plan for 2016, India's government will increasingly focus on infrastructure, agriculture and the financial services sectors. In particular, the creation of the $3.3 billion National Investment in Infrastructure Fund is expected to boost deal-making in airport, highway, port and power projects," it said.
Krishnamoorthy, who joined M&M from law firm Majmudar & Partners, said his role at the auto maker is newly created that it covers M&A in sectors ranging from auto manufacturing to defence and insurance. "With Indian companies increasingly in acquisition mode, they are realising the need for in-house M&A expertise ...Particularly with foreign acquisitions, it is helpful for an Indian company to have on board a legal person who understands international market practice and can bridge the gap between Indian business teams and foreign lawyers, thus enabling more effective decision making," he said.
"Law has become a more proactive function than reactive and companies that are Indian have gained scale. Earlier the demand was more for litigation-centric lawyers which today is more towards corporate lawyers," said K Sudarshan, managing partner at EMA Partners International. Companies are offering compensation with the flexibility to structure 60-70% of the payout as well as transactional bonus for Clevel hires, said Shweta Vora, senior consultant, in-house practice group, at Vahura.