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The Warsaw Voice » Other » July 1, 2009
France in Poland
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Bridging Cultures
July 1, 2009   
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Pirouzan Parvine, avocat, counsel and coordinator of the Central and Eastern Europe French Desk of Salans, talks to Beata Gołębiewska.

You regularly advise French investors in Poland. How do French companies perceive business in Poland when approaching the market here?
Since EU accession in 2004 in particular we have seen an increased assumption by French companies that the way business is done in Poland and the Polish business environment in general is comparable to the situation in western Europe. However, this positive assumption is not wholly correct, since EU norms are not always transposed to and applied in Poland in a similar way to how things work, say, in France.

What are the differences between transactional practices in France and Poland?
When French companies start the whole acquisition process in Poland and the seller/target company is a large domestic player, there is often a good understanding of the steps required to get a deal done. Here, I'm thinking in terms of valuation methods, documents to be made available for review in the data room, the basic representations and warranties to be provided and the conditions of their implementation, and so on.

However, the truth of the matter is that many companies which have been up for sale over the last few years, and probably for years to come, are held by either the people who set up and grew the company single-handedly or by former managers of state-owned companies who took up stakes in the great era of privatization. The business culture gap could be wide with these sellers and result in unnecessary tensions during acquisition. For instance, some Polish entrepreneurs might simply refuse point blank to let the potential buyer do a due diligence on the target company. That's where experienced advisors can make all the difference for parties and close the gaps.

What are the main characteristics of Polish targets for a French buyer?
There are several, but the target company's shareholding structure is worth particular attention. A French buyer will often have to negotiate with a large number of shareholders, often having different or conflicting interests. The French investor is not used to this, although elsewhere in Europe he may have had experience taking over a family run business. It's then up to the buyer's advisors to find ways to overcome this peculiarity and provide solutions in terms of how to negotiate and what to put into documentation so as to overcome divisions among sellers and get the deal done.

At the legal due diligence stage, French companies discover other differences which come as a surprise. One such difference is the timeframe allowed under Polish law for the removal of asbestos.

At the stage of preparing to integrate businesses, French companies sometimes fear they will trigger open concern on the part of the employees or even industrial action. In practice, at least until 2008, they have been pleasantly surprised by the relatively positive light they have been seen in and the resulting good level of cooperation.

Have you witnessed specific difficulties in the post-acquisition period?
When sellers are part of the management of a target company and remain in place after the transaction, reporting rules and corporate governance rules are sometimes a challenge for them. That said, French companies are relatively open to cultural adaptations. French managers have themselves often witnessed foreign shareholdings and requirements imposed on French companies and managers.

Is there any specific role played by Polish companies as part of French groups in the region?
If originally attracted by a Polish target because of its performance and the size of the Polish market, most French investors discover during the acquisition audit phase the links already established by many Polish companies with neighboring countries and even countries located further east. These links are sometimes only business agreements, but it's not rare to find established branches or subsidiaries of a Polish target company in Ukraine, Belarus, Bulgaria or Romania for instance.

This often translates into positive terms in the acquisition process and especially in discussions with the management of the target company. In practical terms, a newly-acquired Polish company forming part of a French group is sometimes given a mission to develop eastwards or in the region. I have also witnessed the relocation of Polish managers to newly established subsidiaries in the region.

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