Gross, Kleinhendler, Hodak, Halevy, Greenberg & Co. (GKH), one of Israel's largest law firms, has over 30 years' experience advising local and international clients on complex business transactions. GKH combines legal expertise with practical experience in advising financial and strategic investors in Israel, and has become Israel's leading business transactional law firm.
GKH Managing Partner Richard Mann says some of the firm's strengths include its solution-oriented approach to legal and regulatory challenges and its familiarity with the corporate culture of international companies and experience in translating that culture in the context of Israeli law. GKH's practice runs the gamut from technology and start-ups to banking, insurance and finance. Mann recently took some time to answer some questions from reporter Howard Stock about GKH's market opportunities and challenges.
WHAT UNIQUE OPPORTUNITIES DOES AN ISRAEL-BASED FIRM HAVE IN THE COMMERCIAL AND SECURITIES LAW SPACE ?
Despite its relatively small size, Israel attracts the interest of major investors and acquirers from around the world, particularly in the technology space. Accordingly, Israel's leading law firms must be able to offer advice on Israeli law and the general Israeli business environment at a level at least as high as that offered these same clients by the world's leading law firms.
HOW ARE GLOBAL TRENDS SHAPING YOUR PRACTICE?
The Israeli economy, because of its political and geographical constraints, is an outward looking economy. Most Israeli companies must look overseas for their markets, and Israel is very welcoming of foreign investors interested in investing in Israel. As a result, we place special importance on building and developing relationships with leading law firms worldwide who can help our Israeli clients with legal advice outside of Israel. We, in turn, are able to advise clients interested in coming to Israel. For this same reason, Israeli law firms are exposed to sophisticated global business and legal practices to an extent that might not be expected for a country of its size.
HOW IS THE GLOBAL ECONOMIC SLOWDOWN IMPACTING YOUR PRACTICE?
While capital markets activities in our practice have slowed significantly in recent months, our mergers and acquisitions practice and related practice areas have been very active. Israel today is perceived as a source of valuable technology, regardless of other market considerations. We are also seeing a surge in corporate restructuring activity, as valuations in a number of key sectors, such as telecommunications, have decreased dramatically, and many companies now find themselves significantly overleveraged.
HOW IS GKH LEVERAGING GROWTH OPPORTUNITIES IN ISRAEL'S TECH SECTOR?
This year, GKH clients were involved in two of the larger and more successful Israeli high-tech exits of 2012. In May this year, XtremIO, a startup that was formed only in 2009, was sold to EMC Corp. This was followed in August by the sale of DesignArt Networks to Qualcomm Inc. These transactions are evidence of the continuing strong appeal of Israeli technology and innovation to leading global technology companies.
HOW HAVE LAWMAKERS' RECENT ACTIONS CHANGED THE NEEDS OF YOUR CLIENTS? WHICH NEW LAWS HAVE BEEN THE MOST SIGNIFICANT?
Recent changes in Israeli law are expected to have a significant impact on the Israeli economy. These include changes to reduce the perceived concentration of economic power in the hands of a few individuals, and changes to lower consumer prices in various sectors, including telecommunications. The proposed legislation to reduce concentration of economic power, in particular, is likely to lead to the sale of a number of large Israeli companies, although those sales are expected to be implemented over a number of years.
WHAT AREAS OF OPPORTUNITY DO YOU SEE DEVELOPING IN THE FUTURE?
During the last several years, the discovery of significant natural gas reserves off the Israeli coast and related developments have given rise to our growing energy and environmental practices. This is a promising new area for Israel and for our firm and its energy practice. The exploitation of offshore resources is new for Israel, and the role of international industry leaders will be important if Israel is to maximize the potential inherent in these reserves. Here, again, cooperation with leading international law firms will be important.
We are also seeing increased government regulation in many sectors, including financial industries such as banking, insurance and pension and long-term savings. Israel weathered the most recent economic crisis far better than many other economies, and there is obviously a strong desire on the government's behalf to take steps to ensure that the same can be said when the next crisis hits.
HOW IS GROWTH IN EMERGING MARKETS IMPACTING YOUR PRACTICE?
Last year, our firm advised ChemChina in its $2.4 billion acquisition of the Israeli agrochemical manufacturer Makhteshim Agan. This complex transaction, which raised a number of novel legal issues, is the largest investment by the Chinese in Israel to date. We expect that cross border transactions with China, as well was with other growing markets such as India and Brazil, will represent a larger portion of our business in the coming years, and we have assembled specialized practice groups with the experience and knowledge necessary to handle that work.