Interview: Tech revival?
John Walsh talks to Wall Street lawyer Alan Bernstein about Irish technology firms doing business in the US.
Alan Bernstein is a lawyer based on Wall Street with the firm Carter Ledyard & Milburn who has extensive experience of working with Irish companies which have expanded into the US. In fact, Irish clients grew to be a substantial part of his practice in the years leading up to 2008. Since then it has been “awful”. Emphasising that he is citing anecdotal evidence, he says there has been a massive fall off in Irish companies entering the US market over the past few years. Whereas in the mid-noughties he would have generated $600-$700k in fees from Irish clients, that is now down to $200-$300k each year. And much of the current fee income is derived from litigation – one of the by products of the recession – rather than transactional business, he says.
“I see no pick up in business from Ireland. It has been awful. In the past two years very little business has come out of Ireland. But the impression I get is that some things are starting to happen. At least people are starting to talk about deals, but I have not seen any come across the line.”
Bernstein who has a degree in political science from Stanford and a law degree from Berkeley has been practicing as a lawyer since 1983. He stumbled across the Irish market through his dealings with the Irish diagnostics firm Trinity Biotech in the early 1990s. Back then the firm had been working on a technology product that attempted to conduct HIV tests through saliva samples. It listed on the Nasdaq in 1992 on the back of this product. Subsequent to the listing Trinity moved into the broader area of diagnostics.
“That is where Trinity grew from”, says Bernstein. “We did mainly financings and acquisitions. Then in the late 1990s I saw the Celtic Tiger booming and thought this looks like a promising opportunity. By that point several of the Trinity Biotech people had moved to other companies and I had relationships with them. I had developed relationships with several Irish law firms through Trinity so I began coming to Dublin in 2000 to see what I could do with Irish companies going into the US”.
Bernstein deals primarily with technology firms but increasingly he has branched out into life sciences. His practice mostly focuses on deal financing, mergers & acquisitions, licencing, joint ventures, setting up subsidiaries, cross border tax issues and litigation.
Overall, he has been very impressed with Irish corporates in the technology and life sciences sectors.
“I have been really impressed with Irish companies I have dealt with. They seem to have a solid scientific basis and I have found management teams generally to be savvy and sensible and they do not waste time on frivolous issues. In other countries I have found that a lot of time gets wasted on things that do not matter.
“Ireland is a terrific place to do business. I have dealt with companies in France, Germany, Canada, Israel, Denmark and Sweden and Ireland is by far my favourite place to do business. Irish companies have a clear perception of goal and strategy, there is a forthrightness about intentions, there are clear communication lines and the decision making process is very organised.”
He declined to comment on the efficiency or otherwise of Irish government bureaucracy because he has very little first hand experience. But it has never posed as a hindrance in any deal he has been involved in, he adds.
“But I do find the Irish corporate system clunkier than the US. By that I mean the rules around the issuance of share capital and the rules around shareholder meetings tend to be a lot more arcane than ours. I think the Irish system is a lot closer to European than Delaware. Under the Delaware system corporates can be a lot more flexible. But overall, I have not really come across any roadbloacks in Ireland. In other countries I have come across rules that I just do not understand”.
Bernstein says he can’t divine whether the drop off in activity over the past few years is because Irish companies cannot access finance to execute cross border deals or whether there are a lack of opportunities. “All I can say is I know there is very little activity. I don’t know the reasons why, I can only guess, but I think companies may have decided to tend to their knitting and stay close to where they are now. After all, survival is more important than growth”.
The banking crisis and subsequent EU-IMF bailout may have tarnished the country’s reputation but it has not hampered Irish corporates from doing business in the US, he argues. “I think there is a bifurcation of the economy into property problems and the export driven companies, which are completely different other than that their home country’s financial system has been destroyed. Technology guys in the US are smart enough to know how to separate issues. I do not think they would be any less inclined to do business with an Irish company because of the problems of the country as a whole”.
Overall, Bernstein is bearish on the US economy, at least over the near-to-medium term. “I think there is going to be a very tenuous and uncertain recovery. It is not clear to me what strengths the US has to exploit over the next decade on world markets. The fate of our multinationals are not necessarily tied to the fate of the US. Our car companies are doing better but Detroit is still a disaster zone and it will remain so. It is unclear what competitive advantages we retain going into the 21st century. There is a lot of uncertainty in the business community which undermines investment horizons”.