IFLR 1000
The Guide to the World's Leading Financial Law Firms

For Hungary, the economic crisis was structurally more profound than for some of its regional neighbours. The poor shape of its national budget meant that those who would look to invest in countries like Poland or Czech Republic practiced restraint with regard to Hungary. There were higher governmental taxes on business and consequently growth was slower.

Strategic investors are now looking at their investments and debating whether it is worth staying or engaging in "transformational" transactions to increase market share. "Exit or doubling down [gambling on a larger investment]," is the choice of investors according to one partner.

Nevertheless, the tide might be turning and firms have observed a pickup in M&A activity. "We believe that Hungary follows the regional trend with more M&A and private equity," says one partner, adding that, "it can be compared to Poland, the Czech Republic and Turkey. The transactions going through are definitely increasing in size". Another partner says: "We see that foreign investors have more and more confidence and trust that the environment will be good for them."

In an M&A market formerly dominated by real estate, confidence is now growing in the energy, TMT and pharmaceutical sectors. There have been wind farm and biomass plant acquisitions and firms are seeing power plant transactions in the pipeline. The TMT sector is also generating some noteworthy deals. "According to market trends TMT is another growing area", says a partner.

The pharmaceutical sector has always been heavily regulated but new laws will oblige current owners to sell and so partners also predict activity in the sector. Additionally, one partner felt that the state would like to encourage domestic M&A and is taking nascent steps to this end.

A regional trend sees private equity making a return to the market. This is also true in Hungary, but on a smaller scale, with private equity investing in startup ventures. "Funds are reaching the natural time to sell investments," says one partner, who adds that "private equity sellers are desperate to sell and buyers are desperate to buy". The market has also seen financially distressed transactions, where holding companies are under distress or local oligarchs borrowed too much and are now compelled to sell good assets in order to retain their empires . Furthermore, banks are trying to get rid of assets in order to clean their banking portfolios.

One partner sets the scene neatly: "It's not a golden age but its better. The market is back to 2005. We're looking to get back to 2007 in value and volume".

CMS Cameron McKenna has built itself a formidable reputation in M&A and in 2010 it completed more M&A deals in the CEE (Central & Eastern Europe) region than any other firm. Its impressive regional network clearly plays a key role in its success: "CEE is on our radar and they're very strong in that area," says one client. One peer notes that "on the bigger deals they bring in lawyers from Prague".

Clients have also noted the firm for its innovative approach to matters. "It was a complicated transaction. There was a brand new law which hadn't been interpreted and they managed to persuade the regulator," says one client, adding: "Their technical grasp of the law is really good. They didn't have friends in high places, but negotiations were very persuasive. They educated them [the regulators] fast".

The Budapest office was landed a blow when Robert Hayhurst left for Brazil in order to fulfil a new role with the firm. However, to strengthen the practice, the firm hired partner Eva Talmacsi from the firm's London office where she now splits her time between Budapest and London. Anikó Kircsi has been drawn out for praise by clients. "She is technically very good and hardworking. She's very helpful," says one client.

CMS advised its key client Advent International on its agreement to acquire Provimi Pet Food (PPF) from the Provimi Group for €188 million. It was a competitive bid for the client due to the tense timeframes involved within a multi-jurisdictional setting.

Additionally, with much publicity, the firm is advising the Hungarian Asset Management Agency in relation to the €56 million restructuring and recapitalisation of Malev (involving negotiations with the Russian minority shareholder). The firm also advised Siemens / Osram on the cross-border merger of Osram in Hungary into the Slovak subsidiary Osram. It was one of the first cross border mergers that materialised since the EU Merger Act became operational in 2008.

Kajtár Takács Hegymegi – Barakonyi Baker & McKenzie is well respected by its peers, although it is felt that they are not as strong as some of the other top tier firms. "Baker & McKenzie is strong in competition and TMT," says one partner, "but they're not a CMS or White & Case in M&A". Observers have also noted diminished visibility from the firm.

Nevertheless, it has the wealth of experience that is necessary for big-ticket mandates. Pál Takács is a highly respected figure in the market. "Takács is a big name," says one peer, "and he's also involved in cross border work". Partner Ines Radmilovic is also praised. "She's been in the market for almost 20 years. She's a solid practitioner," says a peer.

The Budapest office attracted significant new clients in energy, telecoms, and pharmaceuticals sectors. Such work extended beyond transactional activity to include cross-disciplinary advice.

The firm advised key client Magyar Telekom on its €4 million acquisition of the Daten-Kontor Group and advised the same client on its €6 million acquisition of a 100% stake in Modultechnika. Elsewhere, the firm represented the Hungarian subsidiary of AES Corporation on the attempted €7 million sale of its power plant in Hungary through an asset sale transaction (which is rare in Hungary).

Pál Takács' cross-border skills were employed when the firm was engaged in an atypical cross-border merger concerning a Hungarian company. In the deal, the firm advised a multinational on the corporate aspects of the merger with its Hungarian operations as part of a corporate restructuring.

The firm's large and diverse M&A and private equity team has earned the admiration of competitors and clients. "White & Case is a very significant player with experienced lawyers," says one peer.

Clients are especially pleased by the firm's performance. "They're very professional, very business oriented...combined skills and have good legal knowledge," says one client, adding: "They don't overdo the legal side when it comes to talking about commercial matters". In fact, it is the firm's commercial awareness that client's value the most, as one says: "They're quite commercial and not overly legalistic. They know how to get a deal done. It's a good combination of law and business".

Despite having been landed a blow by the departures of Zsuzsa Kovács and Kinga Szabó; the firm's "experienced lawyers" were drawn out for praise. "In private equity, Edward Keller has done a good job," says a competitor. Robert Irving is praised for his technical ability. "There was technical skill definitely at the top level. Irving was innovative...it required creativity and common sense," one client says, with another adds: "He [Irving] was very accessible, even if in the middle of something he'd come back to me on very short notice".

Gergely Horváth was also praised for his negotiation skills: "I had a positive experience with him at the negotiation phase and how he handled the situation when the client had problems," one referee said.

In a high profile private equity deal , the firm represented Invitel Holdings with regard to the €221 million sale though auction of Invitel International, its international wholesale business. Along with its Prague office, the firm also advised on the second largest private equity exit of 2010 in the CEE (Central & Eastern Europe), representing Falcon Group in its €574 million sale of 100% of Ceské Radiokomunikace through an auction process to three funds managed by Macquarie.

Siegler Law Office/Weil Gotshal & Manges is a market leader in transactional M&A work. The broad practice attracts high value mandates from state and private entities and the Budapest office successfully reflects its international reputation.

Clients describe the firm as "accessible", with one saying: "They're very professional; they know what to do to deliver".

Siegler Law Office/Weil Gotshal & Manges is involved in one of the highest profile cases currently in Hungary, advising MOL on merger and acquisitions and takeover defenses in relation to the €14 billion acquisition of a 21.2% stake in MOL by Surgutneftegas. Surgutneftegas purchased its stake in MOL from OMV.

In collaboration with the Prague office, the firm was also representing CEZ in the formation of a €1.4 billion strategic alliance with MOL. This is in order to create a 50-50 joint venture for a gas-fired power and heat generation business in Croatia, Hungary, Slovakia and Slovenia.

The firm advised FHB Jelzálogbankin on the purchase of all of the shares in Allianz Bank. Furthermore, it assisted in the conclusion of a twenty year €54 million strategic cooperation agreement between FHB and Allianz Insurance in bancassurance (process of the bank selling insurance products manufactured by insurance subsidiaries owned by the bank) and assurbanking (process of an insurance company selling banking products manufactured by banking subsidiaries owned by the insurer) matters.

Allen & Overy is a solid top end player. "A&O is fairly active but tier two is accurate," says one partner. There was some feeling that the size of the firm affects its visibility. "I think they're a small office...below 20. They do some transactions but they're not really visible," says one peer, adding: "They're active on financing deals but not really visible here [M&A]".

Nevertheless, clients have been very pleased with its work. "We're very happy with them," says one client, adding: "it went very smoothly...it was efficient, pragmatic and responsive. They were double checking everything and were available all the time".

Partner Zoltán Lengyel was praised by one client as "great for negotiations. It's comfortable having him on my side". Clients have also praised the firm for its commercial awareness, "Towards the end when we needed to make a commercial decision, they gave us a list," says one client, "It was not just an abstract list, it had the key ones [key commercial concerns]. They were able to rank issues in commercial importance."

The firm advised Wanhua Industrial Group on its attachment to the complex restructuring and subsequent acquisition of equity in BorsodChem. This transaction was multi-jurisdictional and included the need for Hungarian, English, Polish, Czech and Hong Kong corporate, banking and restructuring advice. Furthermore, the firm advised UnibailRodamco on the sale of its subsidiary holding, a stake in the Árkád shopping mall in Budapest.

Another notable deal saw it advise Randstad on the acquisition of ProfiPower and subsequent merger of Randstad Hungary and ProfiPower. The firm also acted for Liberty Global International/UPC on the auction for the shares in FiberNet and subsequently on the purchase of assets (network).

Gide Loyrette Nouel has recently reorganised its activities, integrated the Belgrade office with the Budapest office and transformed the Budapest office into a regional hub. The firm has consolidated its position in the second tier with notable mandates this year.

The team advised France Telekom during the tender for the At €1.4 billion privatisation of Telekom Srbije. Its advice included a full due diligence report and due diligence related negotiations during the process. The sale is one of the region's major transactions in the past decade.

Furthermore, the team alongside its Paris office advised Lafarge in a cross-shareholding project and on the establishment of a cement production joint venture between Lafarge and Strabag. The deal brings together five production plants in four countries under a holding company in Austria.

Horváth & Partners is a firm with a growing reputation in the market. Market commentators state that the new assignments of the firm fall into a space between the first and second tiers. "I've met DLA in various transactions. They are active and growing," one peer says.

Head of the corporate and M&A group, Gábor Molnár has been notable among peers. "He is the corporate head of the practice and has good experience," says one partner, adding: "He is well prepared, dedicated and a good negotiator...efficient and available".

This year, Lakatos Köves & Partners move down a tier after peers note decreased visibility and loss of market share. "Lakatos is local counsel to international law firms," says one partner, adding: "They're not involved in big ticket deals or have a substantial international or cross-border practice". "I don't think Lakatos is a significant player. They seem a little under subbed," says another partner. The firm has also suffered from departures in recent times.

However, peers have made mention of the reputation that Richard Lock has built for himself with one describing him as "well known".

Clients shared a similar attitude with peers of the firm. "They are okay but not the best," says one client, adding: "They're very good in what they did but I would have liked more". Nonetheless, there were clients who were satisfied with its performance. "[It was a] very positive experience, good efficient teamwork," says another client.

Despite the above, this year, Lakatos Köves & Partners have in fact been involved in the M&A aspects of the highest profile financial restructuring in Hungary. In a deal worth €1.2 billion, the firm advised Permira and BorsodChem with regard to the restructuring of Borsodchem debt and then the acquisition of full control over BorsodChem by Wanhua.

The firm was also involved in the Aviva cross-border merger of a Hungarian subsidiary, which in the end was aborted. Nevertheless, the Hungarian corporate and regulatory process had completed. It was the first approved cross-border merger process in the Hungarian insurance sector and enabled the firm to leverage the know-how it acquired during the ING cross border merger in 2009.

Nagy és Trócsányi was established in 1991 and is the largest home grown independent law firm in Hungary. Additionally, it is the only Hungarian firm operating in New York. Nevertheless, market commentators occasionally observe it on deals but feel that it does not have a dominant presence in the market. "In M&A, I don't think they're so active," says one partner. "I've not seen them in M&A in ten years. They may have a practice here but they're not present in the high profile deals," another partner adds.

Andrékó Kinstellar climbs up into the third tier this year. The firm has been active in M&A over the last 12 months and market commentators believe that its rightful place is here. "Kinstellar is former Linklaters. After they left, their activity diminished," one partner says. Nonetheless, as another partner states: "We saw them twice last year. There's no question that they've got a market presence".

Led by Ádám Máttyus, Kinstellar advised FN Cable Holdings on the €46 million sale of its Hungarian subsidiaries to Magyar Telecom. Furthermore, the firm was involved in one of the largest regional M&A deals of 2010 when it advised Turk Telekom on the €221 million acquisition of a part of the wholesale business of Invitel in CEE.

While M&A might not be Faludi Wolf Theiss' strongest suit, it has undoubtedly been visible on the market. "We see them regularly, especially in everyday M&A deals. They are quite competent," one partner says. "Wolf Theiss is fairly active. We have some experience with them," another partner says.

Oppenheim has had a busy year. The firm has developed a positive reputation in corporate and M&A work and is a favourite for local counsel referrals from certain global firms including Freshfields Bruckhaus Deringer. Indeed, "Oppenheim is former Freshfields," says one competitor adding that "they might have referrals [and] "they are strong in M&A".

In a highlight deal, the firm advised CVC Capital Partners with regard to the post-closing phase of the €23 million acquisition of InBev, which involved an intricate corporate merger process.

Partos & Noblet in cooperation with Hogan Lovells has had a steady year with its fair share of M&A work. The firm has seen a mixture of cross border and Hungary specific deals this year and advised JCL on the Hungarian elements of the purchase agreement with regard to certain assets of Logwin. The firm is also advising Hungarian owners of a pharmaceutical company on the sale of a majority stake in, and joint venture with regard to a Hungarian pharmaceutical company.