Read more - Ascendant Capital Advisors

year 2 // issue 10 // july 2009 // EUR 7.50.-
MAGÁN
BANKÁR
PARTNERS
m&a hungary
UNDER
CAPITALIZED
COMPANIES?
IMAP: pole position in CEE
Survival, capital raising, expansion
What makes hosting green?
Dollar cost averaged equity raising
Fights for the rent
M&A CEE: back on track?
Hungary: no longer emerging market...
Tax changes: reasons to be cherful?
Deal of the month: positive diagnosis
for entrepreneurs and international companies considering
mergers, acquisitions and finance raising in hungary

Amsterdam
Baltimore
Beijing
Belgrade
Bogota
Bologna
Valuation | M&A | Financing
MB Partners Zrt.
IMAP Hungary
IMAP: GLOBAL MIDDLE MARKET EXPERTS
IMAP, the proven expert in middle market activity, helps you connect anywhere
from Budapest to Milwaukee, New Delhi to Bogotá, Paris to Atlanta, and everywhere in between.
IMAP (IMAP.com) represents the global middle market; the bedrock of all our world’s economies.
Bratislava
Brussels
Bucharest
Budapest
Buenos Aires
Caracas
Chicago
Cleveland
Colorado
Springs
Copenhagen
Dallas
Denver
Des Moines
Detroit
Dublin
Halmstad
Helsinki
H–1024 Budapest, Lövőház u. 39., Hungary
Phone: +36 1 336 2010 | Fax: +36 1 202 1471
www.mb-partners.eu | www.imap.com
Istanbul
London
Los Angeles
Mannheim
Mexico City
Milwaukee
Moscow
Naples
New Delhi
Oslo
Paris
Portland
Prague
Salt Lake City
San Jose
Sao Paulo
Seattle
Shanghai
Sofia
Southport
St. Petersburg
Sydney
Tel Aviv
Tokyo
Toronto
Vancouver
Vienna
Warsaw
Zagreb
Zurich
MAGÁN
BANKÁR
PARTNERS
UNDER
CAPITALIZED
COMPANIES?
WITH THE DEEPENING OF THE ECONOMIC CRISIS,
WE HEAR MORE AND MORE ABOUT THOSE POOR, UNDERCAPITALISED COMPANIES.
A partner of ours, who distributes household goods,
complained to me the other day that he could perform
well, even these days, only if his company wasn’t undercapitalised.
If he had enough capital, he could stock an
appropriate selection for his customers, who will order
from him if they get 60-90 days credit. “If we had
enough capital, our banks wouldn’t take all our profits”
– he argued. “What a competitive advantage capitalrich
multinational companies have against cashstarved
Hungarian entrepreneurs…” – He would have
added, had he been sure of a sympathetic reaction.
I have no objection against capitalising companies;
after all I make a living by arranging such and similar
transactions. However, this capital-shortage problem
reminds me of the penniless little men. Recently a café
waiter explained to me, in response to a courtesy
question about their post-crisis business, that success
may only be achieved by people who were already rich,
which position could only be attained through theft,
inheritance or lottery”. (Poor soul was ignorant of the
dismal statistics, that the 95% of lottery winners lose
their winnings in 12 months or less.)
entrepreneureye
I believe that this “capital-shortage” problem, in most
cases, arise when people misunderstand or misinterpret
the cause and effect relationship. Let’s look more
closely what is causing this damned lack of capital:
ITS BETTER TO BUILD A BUSINESS
MODEL ON CREATIVITY THAN IT’S CASH
Inventory management. The Japanese solved this
problem after WWII, when – with the help of an
American statistician, W. Edwards Deming - introduced
the concept of Just-in-Time inventory management.
This meant simply that stocks, instead of being stored,
should be received as and when needed. Of course,
just-in time-delivery is only possible for those who
produce based on precise plans, with discipline and
without rejects. It also helps if your product or service is
differentiated, as commodities may be purchased
anywhere. Only suppliers of exceptional quality and
elsewhere unavailable products may continuously
produce to order, rather then for the warehouse. Ferrari
need not keep an inventory of its wait-listed models.
m&a hungary letter
3

4
entrepreneureye
Receivables financing. This is the twin brother of the
piling-up-of-stock syndrome. Buyers of sought-after,
differentiated, or exceptional value products or
services dare not ask suppliers for credit. Should the
buyer need financing, he better approach his banker.
This problem only exists in the case of commodities,
where the producer/service provider feels that his
product is not sufficiently differentiated and he has to
“bribe” customers with “favours” to get the business.
No wonder, that the banker-turned-food-processor
cannot recover the cost of his faceless service and the
financing cost of interest-free buyer credits eats up the
profit he makes on his core business.
DEBT REFINANCING IS THE WORST
USE OF EQUITY CAPITAL.
Debt refinancing is the worst use of equity capital. It is
a basic principle of finance, that debt – even in these
credit-strapped times– is cheaper than equity
financing. True, in cash flow terms it can be painful to
cough up interest and repayment every quarter at 12-
14% interest in HUF (or 6-8% in euro) terms. However,
capital providers will expect much higher, no less thank
20% to 30%, returns on their investment. If the
company is unable to service its loans, it needs a
competent new management team more, than an
equity provider.
...JUST-IN TIME-DELIVERY
IS ONLY POSSIBLE FOR
THOSE WHO PRODUCE TO
PRECISE PLANS, WITH
DISCIPLINE AND WITHOUT
REJECTS.
According to business development expert Dan S.
Kennedy, a novel enterprise should be launched with
minimal capital to avoid management risking high
amounts before the concept and its competence is
proven. The business model is best built on creativity
rather than cash, and if it works, its growth can be
safely accelerated and expanded later by injecting
equity. The capital accumulated by management’s
sweat is treated more carefully, than the easy money
received from a bank or through the stock exchange.
The abundance of capital may also be a disadvantage,
as it is much harder to double a multi billion turnover
company than a medium sized one. This is often
demonstrated by the fenomenal success of slowgrowth
business lines of multinational companies after
they are spun-off in an IPO or MBO transaction.
The creativity-instead-of-capital principle was well
demonstrated by British retail chain, Marks & Spencer,
which through selling high quality consumer products,
achieved such a strong market position, that it could
dictate to customers and suppliers alike. The former
were only allowed to pay cash, or with M&S’s own
credit card, while the atter were required to extend 90
days credit. By the mid 1990s, more than 90% of
M&S’s profit came form the investment of its cash
reserves – which, to avoid having to return to its
shareholders as dividends – the company channelled
into insurance and pension fund products offered overthe-counter.
István Préda, Managing Partner,
IMAP Hungary | MB Partners
“Buyers of sought-after, differentiated, or exceptional value products or
services dare not ask suppliers for credit.”
POLE POSITION
IN THE REGIONAL M&A MARKET
IMAP, AN EXCLUSIVE GLOBAL ORGANIZATION OF
LEADING MERGER AND ACQUISITION (M&A) ADVISORY
FIRMS, ANNOUNCED TODAY THAT IT RANKED FIRST IN
COMPLETED M&A TRANSACTIONS IN EASTERN EUROPE
ACCORDING TO THOMSON REUTERS LEAGUE TABLES.
For the first quarter of 2009, IMAP ranked first in
Eastern Europe for transactions completed with values
up to $500 million, improving its fifth place ranking
from 2008. IMAP also retained its first place ranking
from 2008 in the Nordic region for transactions
completed with values up to $500 million. Additionally,
IMAP ranked first in Turkey in 2008 for transactions
completed with values up to $500 million.
“Year over year, IMAP has successfully increased its
number of closed M&A transactions in the emerging
markets of Eastern Europe, Southeastern Europe and
the Middle East,” said Sören Nörbjerg, Partner at
IMAP’s Denmark office, Advizer. “We believe that it is
very important to continue to grow our presence in
these regions, as we anticipate they will experience a
wealth of economic growth in the coming years. We are
very excited to announce that Istanbul has been
selected as the destination for IMAP’s next Global M&A
Symposium, and are confident that the city’s location,
cultural history and global importance will draw
prospective attendees.”
IMAP ALSO RETAINED ITS FIRST PLACE RANKING FROM
2008 IN THE NORDIC REGION FOR TRANSACTIONS
COMPLETED WITH VALUES UP TO $500 MILLION.
IMAP’s Global M&A Symposium will be held on Friday,
October 23, and will cater to private equity groups,
corporate development personnel and global M&A
attorneys. With access to IMAP’s more than 500
advisers, the symposium offers attendees an
opportunity to participate in high-level exchange,
generate new opportunities and develop relationships
with industry professionals on a global scale. More
details on the symposium will be announced in June.
“Business relationships are vitally important in Turkey
and our neighboring countries,” added Sevket Basev,
Managing Partner at IMAP’s Istanbul office, 3Seas
Capital Partners. “As an IMAP partner, we are
committed to developing strong relationships with our
fellow IMAP advisers across the globe. These
relationships allow us to offer our clients an
international set of resources, which are essential to
successfully navigate the current M&A market.”
m&a hungary letter m&a hungary letter
5

6
MAGÁN
BANKÁR
PARTNERS
computing
SZECSKAY ÜGYVÉDI IRODA
In both his opening speech and subsequent
presentation István Préda, CEO of MB Partners Zrt,
spoke of the need to speed up M&A transactions in
times of recession. For this to succeed it is essential for
investors to be suitably motivated to acquire the target
company. This motivation often needs to be reinforced
by the seller, for which a variety of techniques are
available. At the same time it is important for the seller
to be aware of the fact that without an accelerated
sale, much greater losses could be incurred. Préda
explained that cash-flow problems can primarily be
traced back not to the general financial and economic
crisis, but to strategic errors that can be remedied even
once it is already clear that the company is headed
towards insolvency. This could be achieved with the
assistance of the bank and a consultant, for example;
but changes to the growth targets or succession plan
are also possibilities, which may often entail the
involvement of a financial or industry investor.
An accelerated company sale, as a means of
minimising losses, can be pushed through in a little as
12 weeks, in contrast to the customary 6-9 months,
noted the CEO of MB Partners Zrt. With this, the losses
cégértéklevél
cégértékelési és cégeladási hírlevél vállalkozóknak
MB PARTNERS AND BNP PARIBAS HAVE HELD THE 2ND M&A FOR PRIVATE
COMPANIES CONFERENCE, TO GIVE HUNGARIAN COMPANY OWNERS AN INSIGHT
INTO M&A OPPORTUNITIES ARISING DURING THE ECONOMIC CRISIS.
A FAST TRACK M&A DEAL, DESIGNED TO
MINIMISE LOSSES, CAN BE PUSHED THROUGH
IN 12 WEEKS OR LESS, IN CONTRAST TO THE
CUSTOMARY 6-9 MONTHS PROCESS.
ISTVÁN PRÉDA, MANAGING PARTNER, MB PARTNERS
DTM Hungary
SURVIVAL, CAPITAL RAISING, EXPANSION
Jalsovszky
of a possible bankruptcy can be avoided. The first and
most important step in an accelerated company sale is
to identify the opportunities and prospects for the sale.
This can be done in two weeks. Then the materials can
be prepared (e.g. teaser, asset evaluation, case study)
with which to attract the interest of investors. The next
stage is the search for investors via the available
channels, including IMAP's international network of
advisors. Préda highlighted the fact that the sale offer
could be run past every single member of the network,
which has a presence in 40 countries, in the space of
48 hours. If the assessment of sale opportunities
reveals that the company is marketable, the
accelerated sale will be a success, summed up István
Préda, CEO of MB Partners Zrt.
Zsolt Kalocsai, director of RSM DTM Tax Consulting
talked about the importance of Due Diligence audits,
and the various stages in the process. Dr. Pál Jalsovszky,
owner of the Jalsovszky law firm, talked about the
benefits of syndication contracts, which can counter
the “big fish eats the small fish” syndrome arising from
partnership agreements, to the benefit of the majority
owner as well as the minority owner. A syndication
contract represents a preliminary agreement regarding
ownership decisions, the range of service on offer, and
sales, thus clarifying various aspects of the company's
operation to the satisfaction of all the owners.
In his talk on enterprise resource planning (ERP)
systems, Sándor Arányi, CEO and owner of Eniac
Computing, spoke of the benefits of ERP systems
bundled with hosting services. He highlighted the fact
that a well-functioning ERP system renders the
company’s administration procedures transparent,
greatly easing the decision-making process for a
possible investor and boosting the efficiency of the
operations.
Dr. Judit Buday, a partner in the Szecskay Law Firm
gave a presentation on the liability of owners and
senior executives, a topic that has particular currency
in the current economic climate. She made special
mention of the responsibility of former owners following
the sale of their company.
This year’s foreign guest at the conference organised by
MB Partners Zrt and BNP Paribas was Jurgis Vytautas
MB Partners in the Top 5
Based on the latest Dealwatch ranking,
MB Partners came fourth in the M&A
category in terms of the number of
completed deals in Hungary last year, as
reported by Portfolio.hu. In doing so, MB
overtook such notable competitors as
Deloitte, JP Morgan Chase, Deutsche
Bank and KPMG.
Oniunas, head of IMAP’s Croatian member Ascendant
Capital Advisors, who spoke on the current investment
opportunities in Croatia, Bosnia and Slovenia,
presenting the countries’ economic situation and
recent major company M&A deals.
Boldizsár Nagy, director of BNP Wealth Management,
acquainted those present with some opportunities for
managing post-sale “family finances”. He made
special mention of the taxation issues related to the
income from the sale, and issues related to
inheritance. Among the available investment
opportunities Nagy mentioned real estate, artworks,
the establishment or acquisition of a new company, as
well as financial investments.
In her closing speech Judit Scharbert, managing
director of BNP Paribas Wealth Management, said that
“based on the success of last year’s conference, we
decided to make a tradition of it, and hold the event
every year. As we all know, crises are followed by an
upswing, and we need to prepare for these
opportunities in good time. This is why we believe that
this conference couldn't have been held at a better
time. MB Partners and its collaborators provide a full
range of consulting services for both sellers and
buyers, in order to provide company owners and
investors with the fully comprehensive professional
support that they need.”
AS WE ALL KNOW, EVERY CRISIS IS
FOLLOWED BY AN UPSWING, AND
WE NEED TO PREPARE FOR NEW
OPPORTUNITIES IN GOOD TIME.
JUDIT SCHARBERT, MANAGING DIRECTOR,
BNP PARIBAS WEALTH MANAGEMENT
m&a hungary letter m&a hungary letter
7

IT andcontrol
8
what makes
hosting green?
Just because you’ve digitised all the office paperwork, keeping computerised
records instead of using printed forms and letters, and communicating via email,
you are still probably nowhere near achieving the full optimisation of our energy
consumption. True efficiency is only possible through the use of a hosting service.
The greatest drain on energy is represented by the
office servers used for data storage, which consume a
great deal of unnecessary power, while much of their
capacity goes unused. The wasteful operation of
servers results from the fact that moving information
from one place to another generates an exceptional
amount of heat, which then has to be dissipated by a
cooling system. This means that the amount of energy
used is high in comparison to the actual work
performed, and thus efficiency is low.
ONE SERVER POOL IN SWITZERLAND,
FOR EXAMPLE, IS USED TO HEAT AN
ENTIRE SWIMMING POOL.
For this reason, the greatest energy savings can be
achieved by optimising the server's power consumption
for the tasks to be performed. The majority of servers
installed in offices are not equipped for this purpose.
However, a server pool, for example, can be optimised
by switching servers – or even individual processors – on
and off as required. The point of using what are known
IT NOT ONLY MINIMISES THE
ENVIRONMENTAL BURDEN OF
DATA STORAGE, BUT ALSO THAT
OF THE RELATED SYSTEMS
ADMINISTRATION TASKS.
as virtual servers is precisely that the entire body of
data is available “virtually”, but only when we want to
make use of it, by saving, deleting, etc. The result of all
this is that the per-user energy consumption of server
pools is far lower than that of a conventional office
server. Naturally, server pools can also be used to
achieve additional savings due to economies of scale.
For example, it is easier to make use of renewable
energy sources if a greater quantity of energy is required
at a single site, but in certain cases even the substantial
amount of heat that is generated can be put to good
use. One server pool in Switzerland, for example, is
used to heat an entire swimming pool. Due to the nature
of hosting services the server is not tied to a specific
geographical location, which means it could be located
in an area where the high number of daylight hours
makes it possible to power the servers with solar energy.
Beyond all these benefits, at “macro” level, countless
additional savings can be made by dispensing with
other related hardware. For example there is no need to
equip every office with uninterrupted power supplies –
which are highly polluting when discarded – if the data is
all stored in a server pool. Incidentally, the server pools
THE GREATEST DRAIN ON ENERGY IS
REPRESENTED BY THE OFFICE
SERVERS USED FOR DATA STORAGE,
THAT CONSUME GREAT DEAL OF
UNNECESSARY POWER, WHILE MUCH
OF THEIR CAPACITY GOES UNUSED…
computing
usually use diesel generators to provide backup power
in the event of an outage. But here it is also worth
vállalatirányítási THE HOSTING-BASED rendszerek
OPERATING MODEL ENABLES
YOUTOSAVEENERGYBY
CENTRALISING THE ENERGY
CONSUMPTION OF SERVERS
AND EQUIPMENT THAT WERE
PREVIOUSLY DISTRIBUTED
AROUND THE COMPANY
PREMISES.
mentioning the savings in the costs of installing and
running the air conditioning systems need to keep the
servers cool. The hosting-based operating model,
therefore, enables you to save energy by centralising
the energy consumption of servers and pieces of serverroom
equipment that were previously distributed
around the company premises, and by using the
electricity needed to run the servers in an economic
way. Another important factor is that it not only
minimises the environmental burden of data storage,
but also that of the related systems administration
tasks. For example, with a centralised systems
administration service provided as part of a hosting
server, the quantity of costly DAT tapes or other data
storage media used for daily backups is also reduced.
This in turn cuts down on the quantity of hazardous
waste generated, and also lowers the costs of
operation.
Sándor Arányi CEO-owner, ENIAC COMPUTING
m&a hungary letter m&a hungary letter
9

ERP ONLINE
ENTERPRISE RESOURCE PLANNING
AND HOSTING IN ONE
GREEN IT SOLUTIONS
› Connecting remote premises
› Planable and cost effective
› Fast implementation
› Green IT solutions
› ERP and CRM modules
› Timesheet
› Task management, Task alarm
› Workflow
› Resources
› Project and margin control
› Controlling, plan- and fact analyses
› Accounting, payroll
WWW.ENIAC.HU
Main sectors
› Construction
› Real Estate
› Services
› Public works
› Governmental organizations
› Insurance
› Media
› Finance
ENIAC Computing | H–1027 Budapest, Kapás u. 11–15. | phone: +36 1 4578420 | www.eniac.hu
References
› TriGránit
› Arcadom
› Campona
› Ablon
› Plaza Centers
› Concorde
› Viadom
› Aréna Pláza
› Duna TV
DOLLAR COST AVERAGED
EQUITY RAISING
Our lead article (Undercapitalized companies? – page 3.)
argued against curing unsuccessful companies with the “throwgood-money-after-bad”
method. Nevertheless, there exist a more
healthy and – especially in today’s economic conditions – likely
more successful capital raising formula: Bringing in outside
financing to fund strategic acquisitions.
A former entrepreneur, who is operating in an area
much impacted by the crisis and sold his company some
years ago, has recently developed an appetite for
acquisitions to capitalise on opportunities created by
the crisis. His former company’s holding has recently
proclaimed in the press that the group would not make
acquisitions for the foreseeable future. It had only
recently, and expensively, raised money through a rights
issue, but rather than investing it in attractively priced
acquisitions, the money is likely to be spent on financial
stabilization, i.e. to fund the postponement of painful
cost cutting measures.
Now an employee, but still an entrepreneur in genes, the
managing director cannot sit still in this situation. He
wants to acquire parent-funding-notwithstanding and
has started a dialogue with several cash strapped
competitors about taking over their companies or
businesses for pennies. He sees the opportunity to, with
a few million euros, recoup to compensate for the
currently modest financial results by consolidating the
market and positioning his company for higher margins
post-crisis. On a shrinking market, he may build a
dominant position in his niche market under the
competition authority’s “radar”, by acquiring below limitsized
turnover companies.
There are similar opportunities in the distribution sector.
In a two-horse-race market, the leader is trying to survive
with reduced profitability, and a heavy debt load. The
forever-number-two is breathing down its neck, by
expanding sales through store openings and by raising
outside capital. Raising capital now, may cost a bit more
now than it would have a year ago, but the money could
be used for organic and acquisitive growth, with the
ultimate goal of swallowing the leader in 2-4 years from
now.
Another Hungarian company has an opportunity to
acquire the clients of a departing key player for half
value. The parent company is promising cost savings to it
shareholders, while winking at the buyer, that they would
continue ordering from the new owners while the
restructuring, “already successful on paper”, is realised
in practice.
The above scenarios could be distilled into a recipe for
creating successful transactions during 2009-2010:
1. Buy quality capacities and markets for pennies.
2. Cut costs by eliminating duplications, reigning in
expenses.
3. Motivate management by offering real or synthetic
ownership interest.
4. Slim the organisation to a size where it is
sustainable, debt free.
5. Look for working capital-efficient growth, and
bargain acquisition opportunities.
István Préda, Managing Partner
IMAP Hungary | MB Partners
“There exist a more healthy and
– especially in today’s economic
conditions – likely more successful
capital raising formula.”
strategycorner
m&a hungary letter
11

M&Alaw
FIGHTS
FOR THE
RENT
Jalsovszky
Tenants therefore tend to claim reduction of the rent
and unsuccessful negotiations between landlord and
tenant on such reduction may lead to the termination
of the lease. In this article we examine the
consequences of early termination of fixed term leases,
the enforcement opportunities against tenants
intending to get rid of their contractual obligations even
by breaching the lease agreement as well as the
related liability issues.
IN THESE DAYS MANY LANDLORDS
FACE THE PROBLEM THAT THE SUDDEN
WORSENING OF BUSINESS
EXPECTATIONS URGES THEIR
TENANTS TO RETHINK THEIR
EXPENSES SPENT ON RENT. THE
SIGNIFICANT
CHANGE IN FORINT'S
RATE TO EURO FURTHER WEAKENS
THE TENANTS' POSITION, WHILE AT
THESAMETIMETHEIRLANDLORDSDO
USUALLY NOT PROFIT FROM SUCH
FLUCTUATION SINCE THEIR FINANCING
COSTS ALSO INCUR IN EURO.
Consequences of termination
Office leases are usually concluded for a fixed term. If
the tenant terminates the lease before its expiration,
without any valid reason for extraordinary notice, the
landlord may usually demand compensation, which
basically amounts to the rent for the remaining period.
The lease agreement may prescribe further sanctions
though.
IF THE TENANT TERMINATES THE LEASE BEFORE ITS EXPIRATION,
WITHOUT ANY VALID REASON FOR EXTRAORDINARY NOTICE, THE
LANDLORD MAY USUALLY DEMAND COMPENSATION
The tenant may decrease the landlord’s claim by
replacing himself with a new tenant. Although in such
an event the landlord must respect the principles of
civil law on co-operation, we point out that this does
not necessarily require the landlord to accept such new
tenant since the landlord’s lawful interests could be
harmed if the new tenant’s liquidity and reputation
were significantly lower than the current tenant’s.
to leave. The law allows the landlord to prevent the
move of the belongings of the tenant even by power, if
necessary. To ensure the lien, the landlord is,
accordingly, entitled to lock the leased property and
prevent the tenant’s access to it. It is, however,
important that the landlord may take such measures
only to the extent justified by the circumstances of the
situation and the tenant can raise claims for damages,
ACCORDING TO THE HUNGARIAN CIVIL CODE, THE TENANT'S
MOVABLES KEPT IN THE LEASED PREMISES ARE ENCUMBERED
WITHALIENINFAVOROFTHELANDLORDUPTOTHEVALUE
OF ITS RIGHTFUL CLAIMS UNDER THE LEASE.
On the other hand, the landlord is obligated to mitigate
its damages even if the lease is terminated unlawfully.
Therefore, it has to do its best to get a new tenant and
it should decrease its claim for compensation with the
rents to be received from the new tenant.
Protection against tenants
leaving the property
In the current economic crisis tenants often leave the
leased premises without paying the rents falling on the
remaining period of the lease term (and even the
overdue rent). In such a case the landlord can enforce
its claims primarily by drawing down the bank
guarantee or the deposit provided pursuant to the
lease agreement. As these guarantees may be
enforced only in accordance with the lease agreement,
the landlord must carefully examine the agreement:
what claims can be enforced out of such guarantees.
In the event that the bank guarantee or deposit does
not cover all the claims of the landlord, further legal
possibilities are available to secure such claims.
According to the Hungarian Civil Code, the tenant’s
movables kept in the leased premises are encumbered
with a lien in favor of the landlord up to the value of its
rightful claims under the lease. Such lien does,
nevertheless, not apply to movables owned by third
parties (i.e., which are only leased or used by the
tenant). It is a practical question, though, whether the
landlord can prevent the tenant from taking its
equipments and instruments encumbered with the lien
out of the property, In order to prevent such actions the
landlord must timely recognize the tenant’s intention
or (in more serious case) seek criminal protection, for
exceeding the necessary level of power.
To summarize, in order that the landlord can enforce its
claims for the rent it must, on one hand, pay the
necessary attention on the elaboration of the
underlying agreements and, on the other, proceed
quickly. Otherwise, the rent for the remaining lease
term could be enforceable only before the court, in a
time and budget consuming law suit the result of which
is generally unpredictable.
Dr. Pál Jalsovszky / dr. Katalin Perényi
12 m&a hungary letter m&a hungary letter 13
Conclusion
M&Alaw

M&ACEE
BACK ON TRACK
THE NUMBER OF EUROPEAN M&A DEALS ALREADY INKED OR IN THE
PIPELINE IN MAY, IS REMINISCENT OF THE PERIOD PRIOR TO THE
ECONOMIC CRISIS. ON THE BUYER SIDE THE VARIOUS INVESTMENT
FUNDS HAVE REAPPEARED, ALTHOUGH MOST OF THE TRANSACTIONS
CONTINUED TO BE GENERATED BY COMPANIES AIMING TO ACQUIRE
NEW MARKETS AND EXPAND THE SCOPE OF THEIR OPERATIONS.
Among our competitors in the region, the most active
M&A market was Poland, but numerous transactions
were also registered in Bulgaria and Romania.
Unfortunately it seems that Hungary remains on the
blacklist. While only the Russian acquisition of a MOL
stake made it into our roundup for the previous month,
the data published in May contains not a single
transaction related to Hungary. In the table, we have
highlighted the largest and most interesting
transactions.
The biggest deal was concluded in the
pharmaceuticals industry. Sandoz GmbH, a subsidiary
of Switzerland’s Novartis, used some of its parent’s
cash to buy up the Austrian Ebewe Pharma for EUR
925 million. The Austrian company is primarily
engaged in the development and manufacture of
generic medicines for injection. The transaction is still
awaiting authority approval.
The second largest deal, with a value approaching EUR
850 million, was made in Poland. SABMiller bought up
the remaining 28% of the Polish brewery KP, giving the
UK giant full control of the company, which in previous
years has been the most lucrative of its European
investments. SABMiller is financing the transaction
through the issue of 60 million new shares. This
transaction also awaits the green light from the
authorities. The seller, Kulczyk Holding, which is owned
by the private investor Jan Kulczyk, also acquired a
company in May, obtaining a 58% stake in logistics
firm Pekaes for EUR 44 million.
M&A ACTIVITY IN THE ENERGY SECTOR CONTINUES
TO BE DRIVEN BY RUSSIA, NOTABLY GAZPROM,
WHICH EXPANDED FURTHER IN MAY AS THE RESULT
OF A EUR 63 MILLION TRANSACTION.
The past month also witnessed a major transaction in
the media market. The Netherlands’ PCM Uitgevers NV
media agency and publishing house bought 57% of the
Belgian publishing house De Persgroep NV. Some EUR
30 million of the EUR 130 million purchase price was
spent on loan consolidation. These acquisitions were
part of a more widespread upturn in M&A activity in the
media sector: a 40% slice of Spain’s Focus Ediciones
was bought by a Swiss publishing house, while in
France the Le Figaro publishing corporation acquired
another publisher, in order to expand in the legal and
real-estate segments. Also classifiable as a mediasector
transaction was the purchase of the UK’s British
Bookshop and Stationers Plc by an investment fund, as
well as the acquisition, by a UK buyer, of the Swedish
production studio Metronome Film & Television AB.
From among the larger transactions, one of the more
notable was certainly the complete buy-up of Banco de
Andalucia SA. With its EUR 160 million bid, Banco
Popular Espanol SA has become the Andalusian
company’s sole owner. The transaction takes the form
of a share swap. Overall, the energy sector, waste
management and automotive-industry components
manufacturers were the most popular in May. M&A
activity in the energy sector continues to be driven by
Russia, notably Gazprom, which expanded further in
May as the result of a EUR 63 million transaction. This
time the “prey” was Kamchatgazprom, which holds
concession rights in Kamchatka. A particularly
interesting deal was the purchase, by Russia’s
Gazprom Neft, of a minority share in the Sibir oil
company, which is British-owned but has Russian
interests. The EUR 175 million deal will be executed
with the participation of a Cypriot company, through
the making of a public offer. An energy-sector
transaction was also concluded in the CE-European
region, as the Czech Republic's Lumius further
increased its market share by acquiring
Ceskomoravska Energeticka.
Major M&A deals (May, 2009)
14 m&a hungary letter m&a hungary letter 15
Target company
Alfa Beta Vassilopoulos S.A. (34.73% ) (Greece)
ALPHA sim S.p.A. (Italy)
ArcelorMittal Ostrava AS (Czech Republic)
Autohaus Woelfle GmbH & Co KG (51%) (Germany)
Avondale Environmental Services Ltd (50% stake);
Shanks Group Plc(UK)
Banco de Andalucia SA (19.93% stake) (Spain)
Bevesys Finland Oy (Finland)
BOS SA (Poland)
British Bookshop and Stationers Plc (UK)
Cechofracht AS (Czech Republic)
Ceskomoravska Energeticka (majority stake) (Cz)
Close Brothers Corporate Finance Limited (UK)
Distrifrut srl (Romania)
EBEWE Pharma (Austria)
Eco-Wind Construction SA (41% stake) (Poland)
EMO-FARM Sp. z o.o. (Poland)
Energoaparatura SA (Poland)
Focus Ediciones SL (40% stake) (Spain)
Globexbank (Russia)
Heineken NV (Water bottling division in Romania)
Helix RDS Ltd (UK)
Hemtex AB (Sweden)
IMS Holdings (UK) Ltd (UK)
Isotlar Group (49% stake) (Turkey)
Jean-Marc Maniatis (France)
Julius Baer Holding AG (Switzerland)
Kamchatgazprom (92% stake) (Russia)
Kinexia SpA (Italy)
Klyuch Agro LLC (Russia)
Kompania Piwowarska SA (28.10% stake) (Poland)
Kronochem (East European adhesives business)
Labeljet - Comércio e Indústria de Etiquetas SA (P)
Lackey SA (Spain)
Lamco SpA (Italy)
Le Particulier Editions (France)
MedCore AB (Sweden)
Metronome Film & Television AB (Sweden)
MIS Holding Ltd (Cyprus)
Mobile Entertainment Company Sp. z o.o (Poland)
Source: MergerMarket
Bidder company
Delhaize Group (Belgium)
Julius Baer Holding AG (Switzerland)
ArcelorMittal SA (Luxembourg) 72.1% to 83%
Unterberger Beteiligungs GmbH (Austria)
Landmedia Limited (UK)
Banco Popular Espanol SA (Spain)
Repant ASA (Norway)
Tradis Sp zoo (Poland)
Endless Investments LLP (UK)
OKD Doprava AS (Czech Republic)
Lumius sro (Czech Republic)
Daiwa Securities SMBC Europe Ltd (UK)
Dole Europe SAS (Romania)
Sandoz International GmbH (Germany)
Trakcja Polska - Pkre SA (Poland)
Valeant Pharmaceuticals International (USA)
Introl SA (Poland)
Edipresse Publications SA (Switzerland)
Vnesheconombank (Russia)
Ioan Balan (Private Investor) (Romania)
Baker Hughes Inc. (USA)
Hakon Invest AB (Sweden) 34.6% to 100%
Integrated Medical Solutions Ltd (UK)
Mayer's Cars and Trucks Co Ltd (Israel)
The Franck Provost Salon Group (France)
Julius Baer Holding AG (Shareholders)
OAO Gazprom (Russia)
Mr Pietro Colucci (Italy) 27.485% to 51.627%
Torgoviy Kvartal JSC (Russia)
SABMiller Plc (UK)
Casco Adhesives AB (Sweden)
Domino Printing Sciences plc (UK)
Teka Industrial SA (Spain)
Olam International Ltd (Singapore) 40 to 100%
Le Figaro Holding (France)
MiniDoc AB (Sweden)
Shine Ltd (UK)
Infrastruktura (Infrastructure) CJSC (Russia)
MoCoHub Technology Development SA (Poland)
Demand is high not only for energy-sector companies
in the traditional sense, but also for the industry’s “grey
matter”, as the British soil research company Helix
bought up its US competitor Baker Hughes for almost
EUR 19 million. Green energy was not absent from
among May’s corporate acquisitions. One of the Polish
construction industry’s leading players, Trakcja Polska,
with a smaller investment of EUR 8 million, could
acquire a 40% stake – subject to authority approval –
in Poland’s Eco-Wind Construction SA, which builds
wind turbines. A noteworthy transaction in the waste
management sector was the acquisition of a 50%
stake in Britain’s Avondale Environmental Services Ltd,
by another UK company, Landmedia Ltd. Half of the
entire EUR 36 million purchase price is being paid
Target description
Greek retail chain
Portfolio management and advisory
services for high net worth individuals
Steel and iron manufacturer
Vehicle dealership business
Landfill and waste disposal company;
Soil treatment facility
Spanish regional bank
Bottle and can recycling systems
Food products wholesaler
Book retail stores
Freight forwarding and logistic services
Private energy trading and distribution
Financial adviser
Distributor of fresh fruit
Generic injectable pharmaceuticals
Wind energy
Medicinal products and cosmetics
Construction and engineering services
Publishing house
Bank
Mineral water bottling
Subsurface reservoir
Home goods retail chain operator
Market research services
Automobile spar parts,
Hair salons operator
Asset management of Julius Baer
Gas pipeline operator
Cosmetics manufacturer
Agrarian company
Brewery
Wood adhesives
Printing machinery wholesaler
Household appliances manufacturer
Coffee export services
Publishing group
Medical equipment wholesaler
Television programme production
Holding company
Mobile virtual network operator
Bidder description
Retail chain
Holding company for
the Julius Baer Group
Steel manufacturer
Car retailer
Waste disposal company
Commercial bank
Reverse vending machinery
Wholesaler
Private equity firm
Logistic, rail transporting
M&ACEE
Supplier of electric power
Investment banking
Distributor of fresh fruits & flowers
Generic pharmaceuticals company
Infrastructure construction
Pharmaceutical company
Subsidiaries managing, supervision
Publishing house
Banking service provider
Consumer sector
Petroleum reservoirs finding
Investment services
Healthcare software services
Distributor of vehicles, spare parts
Pperator of hair salons
Shareholders of Julius Baer Holding
Oil and gas exploration gas pipeline
Private investor
Real estate developer
Brewing group and operator of
hotels and casinos, wine, spirits
Wood adhesives and resin systems
Printing equipment manufacturer
Household appliances
Raw cashew nut exporter, textile
Holding company, publishing sector
Investment services, softwares
Film and television production
Construction
Mobile content provider
Deal value
Th. EUR
138 040
n.a.
n.a.
n.a.
35 960
163 560
2240
60 631
n.a.
n.a.
n.a.
87 000
n.a.
938 440
8 120
20 880
4 593
n.a.
n.a.
n.a.
18 878
n.a.
n.a.
n.a.
n.a.
n.a.
62 640
n.a.
n.a.
849 120
n.a.
n.a.
n.a.
100
0
2 546
n.a.
146 160
n.a.

Target company
MYDATA automation AB (Sweden)
Norfolk Royale Hotel (United Kingdom)
OOO Gamma Industrial Coatings (30% stake);
OOO Tikkurila Powder Coatings (30% stake) (Ru)
Oranje-Nassau Energie BV (Netherlands)
PCM Uitgevers NV (57% stake) (Netherlands)
Pekaes SA (58% stake) (Poland)
Pit Stop Auto Service GmbH (Germany)
Prosper SA (45% stake) (Poland)
Prosper SA (Poland)
Przedsiebiorstwo Robót Komunikacyjnych 7 SA
(Poland)
Publicis MARC Group (Bulgaria)
Ramsat SA (Poland)
Renova Group of Companies (Oerlikon Solar's thin
film technology) (49.00% stake) (Russia)
Rhein-Ruhr Energie AG (Germany)
Royal Dutch Shell plc (Denmark)
Russian Alcohol Group (12% stake) (Russia)
Saeco International Group SpA (Italy)
Sibir Energy Plc (7.8%) (UK)
Slantse Stara Zagora - BT AD (Bulgaria)
SPE SA (Belgium)
Sunila Oy (Finland)
Trasmediterránea SA (Spain)
UPC Telemach d.o.o. (Slovenia)
Vapiano SE (25.1% stake) (Germany)
Vitrogar SA (Spain)
Vredestein Banden BV (Netherlands)
Wikana SA (Poland)
16
M&ACEE
Major M&A deals (May, 2009)
m&a hungary letter
Bidding company
Micronic Laser Systems AB (Sweden)
– shareholder approval
Peel Hotels plc (UK)
Tikkurila Oy (Finland)
Consortium (Germany / France)
De Persgroep NV (Belgium)
Kulczyk Holding SA (Poland)
BLUO SICAV SIF (Luxembourg)
Torfarm SA (Poland)
Torfarm SA (Poland) unkown stake
Trakcja Polska SA (Poland)
Publicis Groupe SA (France)
Telekomunikacja Polska SA (Poland)
Russian Corporation of Nanotechnologies
(Russia)
Kofler Energies AG (Germany)
DCC Plc (Ireland (Republic))
Central European Distribution Co. (Pl, USA)
Koninklijke Philips Electronics NV (Netherlands)
JSC Gazprom Neft (Russia)
Business Centre Izgrev (Bulgaria) 91% to 100%
Electricité de France SA (France)
Stora Enso Oyj (Finland) 51% to 100%
Acciona SA (Spain)
Mid Europa Partners LLP (UK)
Exchange Bio GmbH (Germany)
Teka Industrial SA (Spain)
Apollo Tyres Ltd (India)
Mr Adam Buchajski (Poland) 74.42% to 100%
Target description
SMT assembly machinery
manufacturer,
Hotel
Paint manufacturer
Oil and gas exploration services
Press agency and publication company
Transportation and logistics company
Automotive and engine parts
Pharmaceutical products
Pharmaceuticals distributor
Construction services
Communications agency
Telecommunications products retailer
Russia based producer thin film
technology of Oerlikon Solar
Electricity and gas supplier
Oil distribution business
Producer of alcohol
Coffee machines
Oil and gas properties
Cigarette and tobacco products
Electricity production and distribution
Pulp manufacturer
Passenger ferry services, transport
Cable and broadband operator
Chain of franchise restaurant
Metal glazing services
Tyre manufacturer
Real estate developer, leather goods
Bidder description
Laser pattern generator
equipment manufacturer
Hotel chain group
Paints and coatings
Consortium
Magazine publisher
Finance investment Jan Kulczyk
Fund manager and private equity
Pharmaceutical products,
Pharmaceuticals wholesaler
Power supply systems construction
services, train assembly services
Advertising, media communication
Telecommunications network
Nanotechnology industry projects
Energy consulting services
Business support services group
Importer of beers, wines and spirits
Producing consumer electronics
Integrated oil company
Electricity generator
Paper and cardboard manufacturer
Logistics and airport services,
Private equity firm
Sander family
Household appliances
Tyre manufacturer
Individual
FROM A HUNGARIAN PERSPECTIVE IT IS INTERESTING
TO NOTE THAT THE INDIAN APOLLO TYRES, DESPITE
HAVING POSTPONED ITS PLANNED INVESTMENT IN
THE REGION, HAS BOUGHT VREDESTEIN BANDEN BV.
upfront, and the rest in annual instalments, but only if
the marriage between the two waste disposal
companies lives up to expectations. Although a
seemingly minor transaction, it is nevertheless
interesting to note that the Norwegian Repant, a
manufacturer of automated waste collection
machines, spent EUR 2.24 million on the Finnish
Bevesys, a recycler of bottles and beer cans.
The vehicle industry has seen a tangible upswing in
demand for components manufacturers. For example,
the Israeli Mayer's Cars and Trucks Co Ltd has
purchased a 49% stake in the Turkish Isotlar Group.
The Turkish company had a turnover of almost EUR
400 million in 2008. Germany’s Pit Stop Auto Service
GmbH, which besides producing vehicle components
also operates a chain of while-you-wait vehicle
servicing centres, was bought up by a Luxembourgregistered
investment group. From a Hungarian
perspective it is interesting to note that the Indian
Deal value
Th. EUR
.
n.a.
9 280
n.a.
132 240
44 080
n.a.
24 360
4 296
47
n.a.
4 906
n.a.
n.a.
13 920
114 840
203 000
175 160
n.a.
1 325 000
6 000
110 000
121 800
n.a.
n.a.
n.a.
11 726
Source: MergerMarket
Apollo Tyres, despite having postponed its planned
investment in the region, has bought the well-known
Vredestein Banden BV from its bankrupt Russian
owner. Although unrelated to components
manufacturing or trade, the sale of Germany’s
Autohaus Woelfle certainly deserves a mention in this
section. The company, which sells a thousand new cars
a year, has been bought by the Austrian Unterberger
Beteiligungs.
We have included in the table additional sectors that
previously did not generally feature in the roundup,
with special regard to the typically service-providing
companies. And finally, we complete our overview of
May’s mergers and acquisitions with the acquisition of
an M&A consultant, as the UK’s Close Brothers Group
was sold for EUR 87 million. The Japan-owned, but also
British-based Daiwa investment bank entered into the
transaction with the express aim of strengthening its
position in the M&A market.
Who says transactions can’t
get done in this economy?
IMAP is closing deals in 2009. Here’s a sample:
Buyer/Investor Seller/Divestor IMAP’s Role
Some banks are still delivering funding for conservatively geared “conventional” MBOs.
Strategic buyers are actually acquiring smaller companies that fit their growth strategy, in
particular regarding cross-border transactions.
Good quality, growing niche businesses can still be sold at attractive valuations.
IMAP is an organization of independent member firms and
is not liable for the actions of its members.
Members are individually governed by the rules and regulations of
their jurisdictions and legal forms of organization.
WHAT THESE TRANSACTION CLOSINGS TELL US
Can M&A transactions get closed today?
These IMAP-advised deals show they can.
AS AN IMAP PARTNER, WE ARE PART OF A GLOBAL
TEAM OF M&A ADVISORS THAT GETS THE DEAL DONE
IMAP provides strategic merger, acquisition, divestiture and related
corporate finance services. With more than 70 offices in over 35
countries, we offer local expertise with unparalleled global connections.
In 2008, IMAP advisors worked together to close more than 250 M&A
transactions with an aggregate transaction value of $13 billion.
MAGÁN
BANKÁR
PARTNERS

18
interviewof the month
HUNGARY IS
NO LONGER
AN EMERGING
MARKET
Dr. Heinz Brasic, Managing Partner of
Level Five M&A Advisors, the Austrian
member of IMAP sees a turnaround
already in the M&A activity of middlemarket
businesses with a slow return of
investors. From an Austrian perspective
Hungary has passed the status of an
emerging market, so entrepreneurs are
more critical about Hungarian
investment targets – said the Viennese
M&A expert.
What do you see, how did the crisis effect M&A in
Austria specifically?
In summer 2008 the M&A business came to an
abrupt halt. In particular larger M&A projects have been hit
by the crises and most of the projects have been
postponed or dropped. Specifically those on the target
map of private equity groups. As middle market experts,
IMAP’s key market focus, our business started to struggle
in fall 2008, with no light at the end of the tunnel. The
effect will be that some smaller M&A advisory firms or
WE SEE A POSITIVE CHANGE
WHERE ENTREPRENEURS,
OWNERS AND SHAREHOLDERS
OF MIDDLE-MARKET
COMPANIES ARE SCRATCHING
THEIR HEADS
those who are not part of an international M&A
organization may not have survived this down-turn of the
M&A market. As well as some global investment banks
who dropped that middle-market M&A business and its
related client transactions in light-speed. That should work
in our favor in the future.
Compared to 2008, how did M&A activity change
in Austria this year?
Now, mid 2009, we see a positive change where
entrepreneurs, owners and shareholders of middle-market
companies are scratching their heads, whether or not to
restart projects for national or international M&A projects.
Timing can’t be better for those who want to acquire wellestablished
enterprises with good profitability and high
market share. On the sell-side we see both distressed
companies and highly successful family companies, who
are under pressure for a successor because of the age of
the founder or owner family. In other words, the wait and
see mood is coming to an end and we see some market
stabilization and in certain areas some increase in the first
half of 2009.
What is general “M&A” view about our region from
Austria?
Austria is fully committed to Eastern Europe as a
whole and to its CEE neighbor countries in particular. And
what I can see here in the middle-market business, this
commitment remains unchanged even in the presence of
the economic crises. As any down-turn is followed by an
up-turn, those who have the breath to sustain the
depressive economic times will be the winners. And
Austrian companies want to be well positioned when the
economy swings back to positive grounds. Yes, the
transition speed of some CEE countries may have changed
Dr. Heinz Brasic, Managing Partner,
Level Five M&A Advisors GmbH, Vienna
Dr. Brasic is a former senior executive and board
member in the international electrical engineering and
telecom industry, and more than 15 years of
management experience in the computer industry. An
expatriate Manager with several years of residence in
Prague, Singapore and Paris. His M&A experience
dates back to CEE privatizations starting in 1991,
extendsfrom corporate spin-offs and PE portfolio
restructurings to IPO listings at the stock exchanges in
Vienna and New York. Dr. Brasic is Senior Industrial
Advisor of the EBRD and also serves as non-executive
director on various national and international boards
(e.g. 2006–2008 on the board of Danubíus
Kereskedőház Vagyonkezelő Zrt. – Radio Danubius).
He is a graduated economist, born 1956 in Austria,
married and has one daughter. His hobbies are golf,
music and modern history.
due to the crises boosted by additional political,
governmental or macro-economic reasons, and former
fast movers slowed down dramatically. But I can’t see any
trend to pull-out from this region. In the future it will go
even ‘deeper’ into the East. Today we see early movers
investing in Central Asia and more and more middlemarket
companies entering Russia. M&A strategies and
how to exploit both maturing and emerging markets, by
mapping Eastern Europe, Eurasia and Russia at the same
time, will become more sophisticated and the real
challenge for business development and
internationalization managers in the future.
Are Austrian companies still interested in Hungary
or they find it too risky at the moment?
Austria is a close ally to Hungary, and both nations
have much in common, historically and mentally. Fact is,
that Hungary is no longer an emerging market, as part of
the EU it is a mature and sophisticated economy strongly
grown over the last two decades. Therefore, and that is a
different view from earlier years, Austrian entrepreneurs
and board managers are more critical today about
Hungarian investment targets, not because of the recent
economic weakness and related higher risk, simply
because of the maturation of the Hungarian market.
Potential investment targets are not everywhere around
anymore. It’s more selective since, for example, economic
factors like wages and salaries match Western European
standards, and trained staff to hire turned out to be a
serious bottleneck. So, other factors have to be taken into
consideration to achieve a sustainable investor return
rate. Since years, the requirements of Hungarian
investments are increasing to meet demand of Austrian
companies and other Western investors.
interviewof the month
Which sectors are the most popular in the M&A
market within Austria?
The most attractive M&A market sector is energy, with
its related engineering and technology industries, focused
on ‘green’ power plants, environmental protection,
renewable energy, alternative energy, biomass and photovoltaic
technology. This sector is dominated by very large
power utilities, medium sized engineering companies and
small technology firms. And we will see both outbound and
inbound acquisitions and a consolidation of this market.
In addition, we may not neglect that Austria has more than
50.000 small and medium-sized companies where a
professional succession planning is key to the survival of
such enterprises. That not only provides an excellent MBO
and MBI opportunity, but also perfect targets for CEE
based companies, in particular for Hungarian investors, to
enter the Austrian market.
How do you see the future of M&A in Central
Europe? When can we expect the buyers to return?
I see the return in 2009, as financial crises fades-out
buyers’ fade-in. Middle-market buyers may arrive at this
point one quarter or two later, in the first half of 2010. But
we have to be prepared that FDI foreign direct investments
in the Central European region will shrink by some 50%.
That means that the FDI volume in 2010 will test the levels
of 2001 or 2002. And we will see more strategic buyers
and less financial investors, due to their limited business
model of co-financing and leveraging. But, there are two
drivers who have to be in place in time as prerequisite.
First, I do hope, and I draw this hope on the European
Union only, that there is enough cash liquidity in the
business channels of entrepreneurial risk-taking
manufacturing and service companies, and not locked in
restrictive and risk-averse bank channels only. And
secondly, Basel II rules applied in 2010 will not turn out to
be counter-productive hindering access to bank loans and
mezzanine financing.
Can you summarize in a couple of sentences the
most interesting M&A deal you had so far?
One of the most interesting deals was an
international mandate of an US based private equity firm,
who jointly owns with some US, EU and Asian angel
investors a portfolio company in the mobile payment
technology and m-commerce services business, with
office locations in Washington, Paris and London. During
our service period of 18 months we managed two
acquisitions of a software R/D center in India and a micropayment
competence center in Brazil. Reporting visits held
at the residence of the majority shareholders in Atlanta
and Bangkok and the post-merger integration among
Indian, European and Brazilian time-zones has been a
nightmare, as you can imagine. Today, the company has a
patent portfolio of some 4.000 patents and is the key
technology supplier to VISA for its innovative VISA mcommerce
services solutions.
m&a hungary letter m&a hungary letter
19

20
auditor’s corner
THIS YEAR, MID-YEAR TAX LAW AMENDMENTS HAVE
ONCE AGAIN PROVIDED A SOURCE OF NEWS FOR THE
MEDIA, AND OF COURSE A HEAP OF EXTRA WORK
FOR TAX ADVISORS AND ACCOUNTANTS. IN THE
FOLLOWING WE WILL ATTEMPT TO SUMMARISE, FOR
MANAGERS, THE MOST IMPORTANT CHANGES THAT
WILL TAKE EFFECT FROM 1 JULY 2009.
REASONS TO BE CHEERFUL
PARLIAMENT MAKES MORE WORK FOR ACCOUNTING PROFESSIONALS
MID-YEAR TAX LAW AMENDMENTS EFFECTIVE FROM 1 JULY 2009
Changes in tax procedure
The Act on Tax Procedure has been supplemented with a
passage that specifies the means by which compulsory
VAT refunds should be paid if they have been ordered
based on a ruling by the Constitutional Court or the
European Court of Justice.
The reason for this was a European Court decision
to the effect that the provisions of the Hungarian VAT Act
under which taxpaying entities could not reclaim the VAT
on assets procured using state aid between 31 May
2004 and 31 December 2005, were in breach of
Community law. (Parat case)
Under the new rules taxpayers can reclaim the VAT
by submitting a self-revision within 180 days of the
proclamation of the amendment. A failure to meet this
deadline will result in LOSS of the right to reclaim the VAT.
In a departure from customary practice, the tax authority
is obliged to pay out the reclaimed sum, plus interest at
the central-bank base rate, within 30 days. Under the
general rule on default interest both the Taxpayer and the
tax authority are obliged to pay interest at twice the
central-bank base rate, so in the case of ongoing
lawsuits or cases where the tax authority establishes the
extent of the reclaimable tax, it is advisable to have a
specialist determine which maximum rate of interest can
be claimed.
UNDER THE GENERAL RULE ON
DEFAULT INTEREST BOTH THE
TAXPAYER AND THE TAX AUTHORITY
ARE OBLIGED TO PAY INTEREST AT
TWICE THE CENTRAL-BANK BASE RATE
Voice recording
A doubled-edge sword – but which side is sharper?
Also starting from 1 July, APEH will record conversations
held with its customer service staff. The audio
recordings will be admissible as evidence in taxauthority
and court proceedings. In other words, if it can
be established that a tax deficit was the result of an
error or misleading statements on the part of the
customer service employee, then this fact must be
taken into consideration when establishing the extent of
the fine.
Value Added Tax
Tax planning made simple
Will June see a last-minute spurt in car sales?
The rate of value added tax will rise from 20% to 25% in
July. A 18% rate will also be introduced, payable on
certain dairy products, milk, flour, grain and starch.
District heating bills will also be subject to the 18% rate,
but only from 1 August 2009.
Under the transitional provisions, the decision
regarding which VAT rate is applicable must be made
based on the date of performance. In the case of
services provided on an ongoing basis (utilities,
telephone, etc.), the VAT is payable pro-rata based on
the number of days in the settlement period.
Those companies that are not entitled to deduct
VAT, or can only reclaim a part of it, or who plan to
purchase products that are not eligible for VAT
deduction (e.g. cars), can avoid paying the extra 5% by
bringing forward their purchases.
Offshore Companies
From the largest CEE provider
Personal income tax
A tangible easing of tax burdens
up to twice the minimum wage
Retroactively, with effect from 1 January 2009, the upper
threshold for the 18% personal income tax rate will be
raised from HUF 1.7 million p.a. to HUF 1.9 million. Tax
advances already deducted from wages in the first half
of the year will be offset, and in the case of excess
deductions the surplus will be reclaimable as tax credit.
It should be noted that from 1 September family
support, which is currently tax-free, will be classified as
untaxed income. In other words, it will count towards the
tax base, but will not be taxed. As a result, any other
taxable benefits that are claimed could fall into a higher
tax bracket.
Social insurance and contributions,
a reduction in employers’ burdens
Up to a threshold of twice the statutory minimum wage
(currently HUF 143,000/month), the rate of social
insurance contribution will be lowered from 29% to 26%
from 1 July 2009. Also up to twice the minimum wage
the employer’s contribution will fall from 3% to 1% from
1 July. The benefits related to employing “Start card”
holders will also be added to, as in the first year the total
employer’s contribution and social insurance
contribution payable on wages will fall from 15% to 10%,
while in the second year the 25% rate will be lowered to
20%. In general, the contributions payable on wages in
excess of twice the statutory minimum wage will not
change. People who are frequently sick will get less: if the
employee has been in unbroken insurance relation for at
least two years, sick pay is payable at 60% of daily
average income, falling to 50% if the insurance
relationship has been outstanding for less than two
years.
Next month we will take a closer look at property tax.
Péter Honti CEO-owner, Interauditor Kft.
Crystal Worldwide is the leading expert in
forming and operating offshore companies
in Central Eastern Europe. We have been
at your disposal for over 15 years in
resolving international tax problems and
providing tax planning solutions.
We have offices in Budapest, Cyprus and
Seychelles. In addition to forming and
operating companies, we provide our
clients with tax-structures – widely used by
multinational companies – to help them
improve competitiveness through tax
planning.
We offer:
advice regarding jurisdiction, company
formation, operation, tax planning, and
appropriate offshore solutions;
company registration and formation in
all major tax heavens;
compulsory bookkeeping and auditing;
VAT advisory, other services relating to
registration;
high level banking services.
Crystal WorldWide
H–1145 Budapest, Amerikai út 59.
Phone: (+36 1) 383 0333
E-mail: info@crwwgroup.net
www.crwwgroup.net
m&a hungary letter m&a hungary letter
21

deal of themonth
Finnish-German venture capital fund
Inveni Capital
acquired a 60% stake in
MIACOM Diagnostics GMBH,
a specialist in diagnostic procedures.
IMAP Germany M&A Consultants AG.
participated in the transaction
as the seller’s financial advisor.
© M&A HUNGARY is a monthly publication for entrepreneurs and international companies
considering mergers, acquisitions and finance raising in Hungary.
Published by MB Partners Zrt. (IMAP Hungary) Editor: István Préda, Managing Partner
Address: Millenáris House, Lövőház utca 39, 1024 Budapest, Hungary
Phone: +36 1 336 2010, Fax: +36 1 202 1471, E-mail: enquiries@mb-partners.eu
Annual subscription: EUR 50.- Please visit: www.mb-partners.eu/subscription
positive
diagnosis
Finnish-German venture capital fund
Inveni Capital has purchased 60% of
Germany’s MIACOM Diagnostics GMBH,
which specialises in the development of
diagnostic procedures. MIACOM is
currently experimenting with a new
procedure that could make it quicker
and simpler to diagnose a variety of
inflammatory diseases at cellular level.
The seller was advised by IMAP Germany
M&A Consultants AG.
MAGÁN
BANKÁR
PARTNERS
MAGÁN
BANKÁR
PARTNERS
MB Partners Zrt. | IMAP Hungary
T: +36 1 336 2010 | F: + 36 1 202 1471| 1024 Budapest, Lövőház u. 39. | www.mb-partners.eu | www.imap.com
If you would like to understand
your exit opportunities
in 2009, or prepare your
company to ride the next
sell-out wave, please call
our office on +36 1 336 2010
or email us to
enquiries@mb-partners.eu.
MAGÁN
BANKÁR
PARTNERS