CEELM10 Interview: A Decade of M&A in Serbia

CEELM: Over the last 10 years, what types of M&A projects have been the primary focus of your team?

Doklestic: Over the past decade, our M&A team’s focus has been quite dynamic, reflecting the evolving global and local economic landscapes. We’ve been primarily collaborating with major international law firms, acting as local legal advisors. This role has encompassed a variety of projects, from classical mergers and acquisitions involving transactional documentation and competition clearances to intricate joint ventures. In the banking sector, we’ve been at the forefront of significant consolidation movements. Serbia, at one point, had as many as 30 banks operating in the market, a number that has substantially decreased over the years. The early part of the last decade saw us deeply engaged in restructuring and insolvency deals as we were emerging from the global financial crisis. Handling distressed assets became a primary focus during this period, requiring a nuanced approach to financial and legal challenges.

CEELM: Throughout this period what have been your and your team’s most intense periods?

Doklestic: The intensity of our workload has ebbed and flowed in correlation with regional economic trends and global events. Between 2012 and 2015, we experienced a phase of modest transactional volume, reflecting Serbia’s economic climate and its position within the Balkans and the larger former Yugoslav market. However, the period leading up to the COVID-19 pandemic marked a significant uptick in our activities. We handled an increasing number of deals annually, peaking at 20 transactions per year. The pandemic initially presented challenges, but our pipeline of deals and adaptive strategies ensured that we navigated this period with relative ease. Post-pandemic, we witnessed a surge in activities, further solidifying our position in the market.

CEELM: How have the client profiles changed over the last decade?

Doklestic: The last decade has seen a significant evolution in our client profiles. While we continue to collaborate closely with international law firms on global and regional transactions, where Serbia is often a part of larger, multi-jurisdictional deals, our client base has diversified. This diversification is evident in the increasing number of foreign direct investments into Serbia, where we often take the lead counsel role. Our clients now come from a wide array of geographies, including traditional Western markets like the US and EU, as well as emerging markets such as China and the Middle East. This geographical diversity has been instrumental in keeping our firm engaged and adaptable, especially during times of geopolitical complexities.

CEELM: What new expectations do you see from clients, and what do you feel has dropped in importance?

Doklestic: Client expectations have undergone a significant transformation. A one-size-fits-all approach is no longer viable as preferences and needs vary widely. However, a universal trend we’ve observed is the growing demand for practical, to-the-point legal advice. The era of extensive due diligence reports has given way to a preference for succinct, focused guidance on specific local legal challenges. This trend is particularly noticeable among international firms, private equity funds, and strategic investors, who all seek clear and concise risk assessments. Technology has also emerged as a critical factor in client expectations. Over the last decade, there’s been a noticeable increase in the expectation to integrate modern technological tools, including advanced AI applications, into our legal services. This shift toward technology has been driven by the need for efficiency, particularly when dealing with sophisticated clients accustomed to fast-paced, tech-enabled environments.

CEELM: What have been the main recurring legislative challenges you have faced in making deals happen?

Doklestic: We’ve been fortunate to not encounter significant legislative or regulatory obstacles in our deal-making processes. In Serbia, standard requirements such as merger approvals and specific banking sector regulations have posed challenges but have generally not been deal-breakers. However, the stringent anti-money laundering rules introduced recently have been a notable challenge, particularly in the context of opening bank accounts for foreign clients. This process has become time-consuming and occasionally frustrating – though still not a deal-breaker. It’s a delicate balance between adhering to necessary regulations and maintaining business efficiency, and this is an area where we believe there’s room for regulatory improvement.

CEELM: What do you believe will be the highlights in a similar interview 10 years from now?

Doklestic: Looking to the future, I anticipate artificial intelligence will play a pivotal role in the legal industry. Over the next decade, the integration and effective utilization of AI will likely be a defining factor for law firms. Those who can successfully implement AI technologies will gain a competitive edge, enhancing efficiency and client service. Our firm is acutely aware of this trend and is actively exploring ways to leverage the cost advantage of Serbia’s IT expertise. While competing with Western firms on certain fronts remains challenging, our strategic focus on AI integration positions us well for future growth. In 10 years, I expect the legal industry to have transformed significantly, with AI at the forefront of this evolution.

Doklestic, Repic & Gajin is CEE Legal Matters' Practice Leader for Corporate/M&A in Serbia for 2024 – learn more here.

This article was originally published in Issue 10.11 of the CEE Legal Matters Magazine. If you would like to receive a hard copy of the magazine, you can subscribe here.