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• European tech scene has become a fruitful source of mandates
• AI-driven productivity gains will help lawyers focus on strategy

European lawyers are keen to start working with the continent’s startups and tech companies on their M&A strategies as early in the cycle as possible, experts said.

Getting involved in M&A deals earlier often helps clients to save money, by avoiding mistakes early on and leveraging the lawyer’s sector knowledge and network, according to Caldwell Law‘s London-based Partner and Global Director of Corporate M&A Marcus Wolter.

Caldwell Law focuses on life sciences and tech clients in Europe, the US, Singapore and Japan, including large corporate players and startups. It aims to get involved in M&A projects as early as possible, as well as helping clients define their intellectual property (IP) strategy, Wolter said.

“If we do our job right, follow-up engagements will be the natural consequence of what we have done,” Wolter said, adding that the firm is more interested in long-term relationships than billing every minute.

The tech scene is a fruitful source of mandates. European tech deals began to boom in 2019, with 4,261 deals worth an aggregate EUR 133.6bn, according to Mergermarket data.

Volumes fell a little in 2020 (EUR 114.8bn over 4,348 transactions) but hit a decade-long high in 2021 (EUR 188.7bn over 4,782 deals). The pace dropped in 2023, even though total deal volume is still high by historical standards (EUR 88.5bn over 3,346 deals).

Despite last year’s dip, the year-to-date (YTD) is off to a flying start. Total volumes in YTD24 are EUR 76.2bn over 1,759 transactions, the second-highest score at this point of the year over the past decade. The high watermark was YTD21 (EUR 104.0bn over 2,979 deals).

The largest deal of the YTD has been Intel’s [Nasdaq:INTC] sale of 49% of an Irish joint venture called Fab 34 to funds managed by Apollo [NYSE:APL]. The sale will lead to an investment of USD 11bn.

Deals in the pipeline include Czech information technology (IT) group SUDOP Consulting and Information Technology (SUDOP CIT), which is looking at software acquisitions and could team up with a private equity (PE) investor to acquire larger targets. It uses external advisors for due diligence and legal work.

Experienced M&A lawyers, in particular those with long-standing client relationships, will always have the tendency to approach clients as early as reasonably possible to review and align with their critical, strategic and structural concerns, said Burc Hesse, partner at Latham & Watkins.

However, cost concerns often limit corporate clients from expanding their relationships with M&A lawyers, Wolter said. Having said that, artificial intelligence (AI)-driven productivity gains and innovative business models increasingly allow lawyers to move away from strict billable-hour models, he said.

More services and products will simply become commoditized, allowing lawyers to become more cost efficient, focus on high value items and to broaden their relationships with clients.

AI tools will help more and more – and are to certain extent already helping – legal and other advisors to be more efficient in providing their respective professional services to clients, Hesse said. This is particularly true when it comes to large amounts of documents that have to reviewed, analysed and summarized, he added.

The trend to earlier engagement also has parallels in Silicon Valley. Gunderson Dettmer works with tech startups from inception, including advising on their fundraising rounds. “If the client scales up to where an exit is possible via an M&A sale or an IPO, then we handle that too,” said Andrew Luh, Head of M&A practice at the firm.

The idea is a complete lifecycle representation, Luh said. He added that most of Gunderson’s public company clients were ones where the law firm was involved as their principal outside counsel when they were startups and then continued to grow the relationship from there, he added.

As European tech deals grow in the future, the lawyers who get in earliest will have an edge when it comes to continuing to work with successful unicorns, soonicorns (fast-growing tech companies that expect to achieve unicorns status) and platform plays.

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