With a population of 17.2 million and an employment rate of 5.1%, the Netherlands is the twentieth largest economy in the world, and relies heavily on large, internationally oriented financial, industrial and commercial groups such as Shell, Randstad, Heineken, ING and Philips. Ikea is headquartered in Deflt, an opportune location between The Hague and Rotterdam, while Booking.com, the hotel reservation website, is based in Amsterdam. The country also has a modern, competitive agricultural industry and significant natural gas deposits. As the world’s fifth largest exporter, the Netherlands is dependent on international trade.
A stable M&A market since 2016
In 2016 there were 647 deals in the Netherlands for a total value of €84bn. Despite a slowdown ‒ to be expected after the record breaking years of 2014 and 2015 ‒ deal flow appears to reflect the ongoing confidence in the market.
Although recent elections and political changes all around the globe contribute to regulatory uncertainty that may affect the global M&A market, M&A has kept a steady pace in Netherlands.
The general trend is that Dutch financial buyers stick with Dutch companies. In 2016, of the 133 companies acquired by a Dutch financial buyer, almost 80% concerned a target company with the same nationality. And 46% of the exits were acquired locally, by a Dutch organization, according to KPMG.
The share of tech deals, in which the acquired entity is involved in software, computer services, hardware or semiconductors, as a percentage of total deals has steadily risen from 2009 onwards, both in Dutch and Global M&A market.
While we are writing these lines, BlackFin Capital Partners has entered into an agreement with Intrum Justitia to acquire 100% of the shares in Buckaroo BV, a company providing payment solutions, subscription services and credit management for merchants. The fund was advised by Kempen & Co, Loyens & Loeff, Regulation Partners and Ernst & Young.
Another notable deal ‒ in the automobile sector this time ‒ includes the acquisition of PitPoint, a fuel provider by Total group from Bencis Capital Partners.
A diversified legal market
The legal market is transforming itself in line with the need to adapt to clients’ ever-increasing demands. Many international law firms have chosen the Netherlands as a place of choice, due to its robust legal framework and a business-friendly tax system.
The last couple of years have seen a new wave of international law firms set up here, such as Jones Day, which opened an office in Amsterdam in early 2013, and Osborne Clarke which arrived in 2014. UK based Harrison Goddard Foote and Integrites both made their Amsterdam debut in 2015. Russian law firm Arkitectura Prava was also able to enter the Dutch market. The same year, Taylor Wessing launched in the Dutch legal market through a merger with a local law firm Deterink. At the beginning of 2017, Dentons came to Amsterdam through a merger with local firm Boekel, and announced the arrival of four partners Jurjen Bevers, Paul Halprin, Heico Reinoud and Marnix Veldhuijzen to launch its tax practice on the territory. Time will tell whether this significant arrival changes the face of the legal market or not.
Local law firms such as Loyens & Loeff, NautaDulith, Stibbe, De Brauw and Houthoff Buruma have been able to withstand foreign competition from global firms such as Allen & Overy and Clifford Chance, and together make up the Dutch magic circle.
Although local and international boutiques now share the same territory, “the market is not saturated,” as Flip Wijers, partner at Lemstra Van Der Korst, comments. Collaboration often occurs, “full-services firms regularly work along with boutique firms, notably because many of them are highly specialized.” As another observer mentioned, either local law firms become “knowledge power law firms,” like De Brauw, or they team up with foreign law firms.
In this context, the market is now populated by a mix of law firms driven to evolve. There are the Dutch international players, well-established law firms such as Loyens & Loeff, De Brauw, Stibbe and Houthoff Buruma, but also more and more high-flying boutiques such as Van Campen Liem and Rutgers & Posch.
These top-quality boutiques pride themselves on being independent and want to remain that way. A strong focus is a notable feature of these firms, whatever it may be. For instance, Van Campen Liem on transactional work. And if they are not structured with departments, as is very often the case with business law firms, these firms dedicate themselves to high-quality service. In this way, they are sometimes labeled as “small versions of big law firms,” providing the same service with more proximity and sometimes lighter fees.
Lawyers note that high-level transactions are continuing and, driven by ever more demanding players, related fees remain high. Firms are decreasing costs every day on ongoing affairs, but are pursuing greater involvement in large transactions. In this high-stakes environment, the brakes have been put on hiring partners. While firms have not undergone waves of redundancy, the consolidation phase for practices has been postponed. This may also be the sign of a certain maturity in the marketplace, which has reached a high multi-disciplinary and technical level.
The country benefits from a solid legal framework. For Flip Wijers, a specialist in commercial litigation, the Netherlands is a place of choice for his practice thanks to “qualified judges, providing fair justice and high-level hearings.” In addition, for this expert, the Dutch Act on Collective Settlement of Mass Claims offers a “unique dispute resolution mechanism in Europe.” The country is also an increasingly popular jurisdiction for international arbitration, and a renowned place for IP with the European Patent Office.
Another trend in the Dutch legal market, traditionally spread between Rotterdam, The Hague and Amsterdam, is that many law firms are rallying to Amsterdam, leaving aside their locations beyond of the capital. For example, De Braw left The Hague and has Amsterdam as their only Dutch location. The same is true of Stibbe, which is now only located in Amsterdam.
An attractive environment
The Netherlands is an attractive country for international trade thanks to the particularly favorable tax regime that it offers to businesses. Structuring of tax is made easy, and lawyers are flexible and international enough to deal with all sorts of clients. Some areas are increasing like regulatory compliance, M&A and litigation. “The strong bases of local independent full-service firms, the arrival of the Anglo-Americans and Chinese firms as well as the strong increase of niche law firms has made the market even more competitive” Willem Hoorneman, managing partner at CMS Netherlands points out, “the Dutch legal market is small but competitive.”