Sunday, 15 May 2011

Ukrainian owners hold assets in anticipation of price growth

Many owners preferred to go bankrupt than sell cheaply during the financial crisis.

When the global economic crisis of 2009 hit Ukraine super hard, many expected a surge in merger and acquisition activity to follow in which cash-strapped Ukrainian owners would dump their distressed assets. But it didn’t happen.

Despite being amongst the hardest hit economies worldwide, with gross domestic product dropping 15 percent in 2009, there appeared to be almost no panicky cheap selloff of assets in Ukraine.

In the aftermath, Ukrainian owners of businesses also proved to be among the toughest negotiators. They were squeezed financially and cut off from cheaper loans that they had access to in prior years.

Yet, they still stubbornly held on to their assets during crisis years when cash was considered king, and refused what they saw as low asking prices in the hopes that pre-crisis peak values would return within years.

Viacheslav Yakymchuk, partner at the Kyiv office of Baker & McKenzie - CIS, an international law firm, thinks that the strategy may work, especially since more affordable financing instruments – international credit and capital markets – are beginning to reopen for Ukraine.

Yakymchuk and his law firm are amongst the strongest authorities on M&A deals involving Ukrainian assets. Baker & McKenzie has worked on Ukraine-related M&A deals worth more than $8.5 billion. That’s nearly a quarter of the combined value of total Ukraine-related M&A deals.

In this Kyiv Post interview, Yakymchuk reveals more about the M&A market in Ukraine. Prices are recovering, although the time of super high asset valuations seen before the crisis hasn't come yet, he said.

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