Jean-Michel Darrois: “The Veolia/Suez deal was our most difficult of the past decade”

Leaders League: What is the deal you are most proud of and why? 

Jean-Michel Darrois: When it comes to the successful cases I’ve been involved in, I am above all proud of all those who worked alongside me, but if your question is centered on my personal contribution, I would have to cite Nestlé’s purchase of Perrier in 1992, which was strongly resisted by Italy’s Agnelli group.

When we commenced this project on behalf of Nestlé, our client’s opponent (Agnelli) held a majority stake in Perrier. However, I was able to come up with a strategy that saw their voting rights reduced to a level where they could no longer block the takeover. Several bankers have told me over the years that this was the only time they can recall where a takeover’s success hinged on a single legal maneuver.

On an entirely different note, I am proud of having represented Laurent Fabius before the Cour de Justice de la République.

What has been the most challenging deal of your career, and what key lessons did you learn from it?

It has to be the Veolia/Suez deal. Here, I really must give a tip of the hat to my associates. This was comfortably the most challenging the firm has been involved in over the past decade for many reasons, not least of which the enmity that existed between the two companies, coupled with the fact that previous attempts to merge the two failed. In addition, you had the French government dragging its feet, and that’s before we get into all the legal and regulatory hurdles the deal had to get past.

Some of my colleagues could scarcely believe that capitalism could be so violent, but this deal had nothing on many of those that took place in the ’90s. The difference with the Veolia/Suez deal is the length of time it took to close.

What is the best way to win the confidence and trust of the C-suite?

They place a high value on loyalty. They need to believe that what you are telling them is actually what you truly believe. They set a lot of store by the quality of your personal judgement and in some ways contradicting them actually helps gain their trust. They also need to see that you will work hard to make their ideas a reality.

What are the key pitfalls to avoid during major M&A deals?

From the CEO’s point of view, one of the most important things to pay attention to is antitrust law, but it is one of the hardest aspects of a deal to nail down, because most major deals have a significant cross-border aspect, and any country can throw a spanner in the works of a deal. Tax and labor law are also core considerations. While we work on project strategy together with the company, the above elements must figure in it.

You also need to proceed in a way that builds confidence among the organizations which represent the interest of workers, so they are convinced of the merits of a deal and don’t come out against it, which can make things difficult. Bosses of foreign companies often fail to pay sufficient attention to this.

We increasingly bring in independent consultants, most of the time to give us a second opinion and to make sure we are not inadvertently doing anything to help the other side.

What cultural sensitivities are required to successfully conduct cross-border M&A in your jurisdiction?

Unquestionably, it’s the importance of the state to the success of any deal, even when the deal is between two private companies or in sectors not controlled by the state. This strikes us as self-evident. Whenever possible, it important to keep the state updated on the progress of a project, before it is officially presenting it to the relevant authorities. At Darrois Villey Maillot Brochier, one deal out of every two we work on has a public dimension to it. Independent of applicable rules and regulations, a backlash from the state can considerably complicate any deal.

If you hadn’t become a lawyer, what career path to you like to think you would have embarked upon?