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Commercial Awareness Update - October 2019
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<blockquote data-quote="Jaysen" data-source="post: 14287" data-attributes="member: 1"><p>Welcome to this week’s commercial update!</p><p></p><p>The topics for this weeks write ups are:</p><ol> <li data-xf-list-type="ol">Back to Basics: GDPR and Law Firms </li> <li data-xf-list-type="ol">Uber’s Expansion into the Online Grocery Market </li> <li data-xf-list-type="ol">US Sports Betting Market </li> <li data-xf-list-type="ol">Neil Woodford’s Investment Funds </li> </ol><p><strong>1. Back to Basics: GDPR and Law Firms <u>(by [USER=1]@Jaysen[/USER])</u></strong></p><p></p><p><strong>The Story</strong></p><p></p><p>In May 2018, the General Data Protection Regulation (GDPR) came into force, radically changing the rules surrounding data protection and data privacy across the EU. Companies scrambled to comply with far more onerous rules related to how they collected, used and stored personal data.</p><p></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>Let me dive into how the GDPR has impacted law firms.</p><p></p><p>GDPR uncertainty has led to a surge in demand for advisory work. Businesses of all sizes had to hire advisers and implement systems to make sure they were following the rules, especially given the GDPR’s substantial penalties for noncompliance. Lawyers were there to help companies update their privacy policies, ensure they were processing data on a ‘lawful’ basis, and advise on the new rights that users have over their data. Some law firms, like Herbert Smith Freehills and DLA Piper, even turned to technology to help clients comply with the GDPR in the event of particular data breaches.</p><p></p><p>The GDPR has meant data protection and cyber security issues play a larger role across practice areas. Take Marriott International, for example, which is facing a £99.2m fine by the UK’s data regulator, the Information Commissioner’s Office (ICO). The ICO found that Marriott failed to carry out sufficient due diligence during its acquisition of Starwood Hotels. Following this case, lawyers may well place greater importance on cyber due diligence during M&A deals, as well as seek further contractual protections on behalf of buyer, in case security incidents related to the target company come to light in the future.</p><p></p><p>Finally, let’s not forget, law firms are a business. Just like any other business, they must also comply with the GDPR. Let’s look at this in the context of the recent growth of legal technology tools within law firms, for instance. Thanks to the principles of ‘privacy by design’ and ‘privacy by default’, law firms must consider data privacy during the design stages (which might involve carrying out a privacy impact assessment), as well as ensuring privacy is the default standard for processing data, so only data that is needed to achieve a specific purpose is processed.</p><p></p><p></p><p><strong>2. <u>Uber’s Expansion into the Online Grocery Market (by Flora Raine)</u></strong></p><p></p><p><strong>The Story</strong></p><p><strong></strong></p><p>Last week, Uber announced plans to acquire Cornershop, the largest home delivery platform in Mexico and Chile, with additional presence in Peru and Toronto. Cornershop delivers goods from Costco, Walmart and bakeries, to customers in around 90mins for a fee. The deal is expected to close in early 2020.</p><p></p><p>Walmart offered to purchase Cornershop outright for $225m last year. However, this was blocked by antitrust concerns over Walmart’s large presence and potential for an uneven playing field. Uber does not foresee the same antitrust hurdles, as their deal places them as buying a majority share in the service and they do not have competing grocery services, like Walmart.</p><p></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>For Uber, the deal allows them to continue their expansion geographically, tapping into a well-established network, in Latin America and beyond. Additionally, the deal fits with their vision to be “the operating system for your everyday life”, by offering a multitude of services such as ride hailing, scooter and bike hire, job finder and food delivery. Uber is able to leverage its more than 100 million users to find new lines of revenue which will hopefully boost overall profits.</p><p></p><p>For investors, the move into the grocery market, may curb concerns over Uber’s ability to make a profit. As the global grocery market is forecast to reach $150b by 2025.</p><p></p><p>Legal advisers would have been involved in the due diligence process leading up to the deal as well as drafting the specific terms. Law firms with a presence in Latin America and Canada will need to guide Uber through relevant regulation to enable their services to operate fully in different jurisdictions, particularly Chile where they have had regulatory issues previously.</p><p></p><p>3. <strong><u>US Sports Betting Market (by [USER=525]@Sara Moon[/USER])</u></strong></p><p></p><p><strong>The Story</strong></p><p></p><p>Earlier this month, it was announced that Flutter Entertainment, the new name for Paddy Power Betfair, will be merging with the competitor, the Star Group, who owns Sky Bet. The deal will be worth around £10 billion and will create the world’s biggest online betting group. This merger was influenced by the rapid expansion of the sports betting market after the US Supreme Court ruled in favour of New Jersey in its effort to legalise sports betting. The ruling left it to the state legislatures to decide whether or not to legalise sports betting, and so far, 18 states have followed New Jersey’s step. </p><p></p><p><strong>Impact on Businesses and Law Firms:</strong></p><p></p><p>This newly opened sports betting market is a lucrative opportunity that many companies and investors are having their eyes on. Since the Supreme Court’s rule, there have been active M&A activities, including the Scientific Games’ acquisition of Don Best last year and Stockholm-listed Better Collective’s acquisition of US sports betting websites VegasInsider.com and ScoresAndOdds.com earlier this year. Strategic partnership had also been created between Boyd Gaming and FanDuel, in which the companies share technology and customer base. The NYC Sports Betting Investor Summit is planned to take place 4th November, providing investors a chance to meet sports betting executives and identify any M&A or partnership opportunities. Thus, it seems likely that a flood of M&A activities and partnership deals is set to come for law firms to advise on. Since sports betting has been legalised only very recently, law firms will be playing a key role in advising on the new regulatory framework, which will differ in each state.</p><p></p><p></p><p><strong>4. <u>Neil Woodford’s Investment Funds (by [USER=1160]@Alice G[/USER] )</u></strong></p><p></p><p><strong>The Story </strong></p><p></p><p>Neil Woodford was sacked from his flagship Equity Income Fund on Tuesday (15th October) by administrators. Angered by the decision, he subsequently announced that his last two remaining investment vehicles would be wound down, bringing an end to his investment fund empire which once managed £14 billion at is peak. The downfall of Woodford largely stems from his poor investment decisions, having opted to invest in poorly performing listed companies and making high stakes investments into tech and healthcare companies he believed had high growth potential. These poor investment decisions and their illiquidity led to the Equity Income Fund being flooded with redemption requests, which are formal requests from investors to leave a fund. Because the fund’s assets could not be sold quicker than the rate of redemption requests, the decision was made to freeze the fund last June. Administrators have decided to wind up the fund because they feel that the fund’s portfolio has not been restructured enough to save it.</p><p><strong></strong></p><p><strong>Impact on Businesses and Law Firms</strong></p><p></p><p>An event such as this can make investors incredibly nervous about where to put their money and this will certainly have dented the funds industry to some degree.</p><p></p><p>There is now increased concern about the liquidity within investment funds and regulators across Europe have now launched their own investigations into this to ensure other fund portfolios do not suffer the same fate. The Financial Conduct Authority has issued new rules, effective from September 2020, for property funds that fall into a newly created category ‘funds investing in inherently illiquid assets.’ These rules subject these property funds to greater disclosure requirements and enhanced depository oversight. Perhaps such requirements will be rolled out across the funds industry more broadly in light of the Woodford collapse.</p><p></p><p>BlackRock and PJT Partners have been enlisted to wind-up the fund by selling off the assets it holds, and lawyers will be heavily involved in providing the documentation for the sale of these assets.</p></blockquote><p></p>
[QUOTE="Jaysen, post: 14287, member: 1"] Welcome to this week’s commercial update! The topics for this weeks write ups are: [LIST=1] [*]Back to Basics: GDPR and Law Firms [*]Uber’s Expansion into the Online Grocery Market [*]US Sports Betting Market [*]Neil Woodford’s Investment Funds [/LIST] [B]1. Back to Basics: GDPR and Law Firms [U](by [USER=1]@Jaysen[/USER])[/U][/B] [B]The Story[/B] In May 2018, the General Data Protection Regulation (GDPR) came into force, radically changing the rules surrounding data protection and data privacy across the EU. Companies scrambled to comply with far more onerous rules related to how they collected, used and stored personal data. [B]Impact on Businesses and Law Firms[/B] Let me dive into how the GDPR has impacted law firms. GDPR uncertainty has led to a surge in demand for advisory work. Businesses of all sizes had to hire advisers and implement systems to make sure they were following the rules, especially given the GDPR’s substantial penalties for noncompliance. Lawyers were there to help companies update their privacy policies, ensure they were processing data on a ‘lawful’ basis, and advise on the new rights that users have over their data. Some law firms, like Herbert Smith Freehills and DLA Piper, even turned to technology to help clients comply with the GDPR in the event of particular data breaches. The GDPR has meant data protection and cyber security issues play a larger role across practice areas. Take Marriott International, for example, which is facing a £99.2m fine by the UK’s data regulator, the Information Commissioner’s Office (ICO). The ICO found that Marriott failed to carry out sufficient due diligence during its acquisition of Starwood Hotels. Following this case, lawyers may well place greater importance on cyber due diligence during M&A deals, as well as seek further contractual protections on behalf of buyer, in case security incidents related to the target company come to light in the future. Finally, let’s not forget, law firms are a business. Just like any other business, they must also comply with the GDPR. Let’s look at this in the context of the recent growth of legal technology tools within law firms, for instance. Thanks to the principles of ‘privacy by design’ and ‘privacy by default’, law firms must consider data privacy during the design stages (which might involve carrying out a privacy impact assessment), as well as ensuring privacy is the default standard for processing data, so only data that is needed to achieve a specific purpose is processed. [B]2. [U]Uber’s Expansion into the Online Grocery Market (by Flora Raine)[/U][/B] [B]The Story [/B] Last week, Uber announced plans to acquire Cornershop, the largest home delivery platform in Mexico and Chile, with additional presence in Peru and Toronto. Cornershop delivers goods from Costco, Walmart and bakeries, to customers in around 90mins for a fee. The deal is expected to close in early 2020. Walmart offered to purchase Cornershop outright for $225m last year. However, this was blocked by antitrust concerns over Walmart’s large presence and potential for an uneven playing field. Uber does not foresee the same antitrust hurdles, as their deal places them as buying a majority share in the service and they do not have competing grocery services, like Walmart. [B]Impact on Businesses and Law Firms:[/B] For Uber, the deal allows them to continue their expansion geographically, tapping into a well-established network, in Latin America and beyond. Additionally, the deal fits with their vision to be “the operating system for your everyday life”, by offering a multitude of services such as ride hailing, scooter and bike hire, job finder and food delivery. Uber is able to leverage its more than 100 million users to find new lines of revenue which will hopefully boost overall profits. For investors, the move into the grocery market, may curb concerns over Uber’s ability to make a profit. As the global grocery market is forecast to reach $150b by 2025. Legal advisers would have been involved in the due diligence process leading up to the deal as well as drafting the specific terms. Law firms with a presence in Latin America and Canada will need to guide Uber through relevant regulation to enable their services to operate fully in different jurisdictions, particularly Chile where they have had regulatory issues previously. 3. [B][U]US Sports Betting Market (by [USER=525]@Sara Moon[/USER])[/U][/B] [B]The Story[/B] Earlier this month, it was announced that Flutter Entertainment, the new name for Paddy Power Betfair, will be merging with the competitor, the Star Group, who owns Sky Bet. The deal will be worth around £10 billion and will create the world’s biggest online betting group. This merger was influenced by the rapid expansion of the sports betting market after the US Supreme Court ruled in favour of New Jersey in its effort to legalise sports betting. The ruling left it to the state legislatures to decide whether or not to legalise sports betting, and so far, 18 states have followed New Jersey’s step. [B]Impact on Businesses and Law Firms:[/B] This newly opened sports betting market is a lucrative opportunity that many companies and investors are having their eyes on. Since the Supreme Court’s rule, there have been active M&A activities, including the Scientific Games’ acquisition of Don Best last year and Stockholm-listed Better Collective’s acquisition of US sports betting websites VegasInsider.com and ScoresAndOdds.com earlier this year. Strategic partnership had also been created between Boyd Gaming and FanDuel, in which the companies share technology and customer base. The NYC Sports Betting Investor Summit is planned to take place 4th November, providing investors a chance to meet sports betting executives and identify any M&A or partnership opportunities. Thus, it seems likely that a flood of M&A activities and partnership deals is set to come for law firms to advise on. Since sports betting has been legalised only very recently, law firms will be playing a key role in advising on the new regulatory framework, which will differ in each state. [B]4. [U]Neil Woodford’s Investment Funds (by [USER=1160]@Alice G[/USER] )[/U][/B] [B]The Story [/B] Neil Woodford was sacked from his flagship Equity Income Fund on Tuesday (15th October) by administrators. Angered by the decision, he subsequently announced that his last two remaining investment vehicles would be wound down, bringing an end to his investment fund empire which once managed £14 billion at is peak. The downfall of Woodford largely stems from his poor investment decisions, having opted to invest in poorly performing listed companies and making high stakes investments into tech and healthcare companies he believed had high growth potential. These poor investment decisions and their illiquidity led to the Equity Income Fund being flooded with redemption requests, which are formal requests from investors to leave a fund. Because the fund’s assets could not be sold quicker than the rate of redemption requests, the decision was made to freeze the fund last June. Administrators have decided to wind up the fund because they feel that the fund’s portfolio has not been restructured enough to save it. [B] Impact on Businesses and Law Firms[/B] An event such as this can make investors incredibly nervous about where to put their money and this will certainly have dented the funds industry to some degree. There is now increased concern about the liquidity within investment funds and regulators across Europe have now launched their own investigations into this to ensure other fund portfolios do not suffer the same fate. The Financial Conduct Authority has issued new rules, effective from September 2020, for property funds that fall into a newly created category ‘funds investing in inherently illiquid assets.’ These rules subject these property funds to greater disclosure requirements and enhanced depository oversight. Perhaps such requirements will be rolled out across the funds industry more broadly in light of the Woodford collapse. BlackRock and PJT Partners have been enlisted to wind-up the fund by selling off the assets it holds, and lawyers will be heavily involved in providing the documentation for the sale of these assets. [/QUOTE]
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