Aleksandrs Jemeļjanovs, Chairman of the Hotulanus Baltic Business Club: in conversation with club member, sworn advocate, and arbitrator Andris Bērziņš. On mergers and acquisitions across 20 countries, lessons from insolvency proceedings, and why it is sometimes better to resolve disputes in an arbitration court.
Aleksandrs Jemeļjanovs (A.J.): Andris, it is a pleasure to welcome you not only as a member of our club but also as a professional with unique experience. You are a graduate of the University of Latvia’s Faculty of Law (LL.M.), have been a guest lecturer at the Chamber of Crafts of the Federal Republic of Germany, and are a sworn advocate specializing in financial law and M&A (mergers and acquisitions). Your experience covers the legal support of transactions in nearly 10 countries. Looking at this international scale, what is the main mistake, in your opinion, that Latvian entrepreneurs make when entering the global market for the first time or preparing a company for sale to foreigners?
Andris Bērziņš (A.B.): Aleksandrs, thank you for the invitation. If I had to highlight the most critical point, it is the underestimation of "homework" or, in legal terms—insufficient Vendor Due Diligence.
Many of our entrepreneurs are used to a certain flexibility, which is commendable, but also to an informal approach to conducting business. However, when a serious international investor appears—for instance, from Scandinavia or the USA—they expect perfect order in documentation, including financial records and transparency regarding intellectual property. Attempting to establish order "during the process," such as after negotiations for a sale have already begun, is perceived by the investor as a high risk. This often dramatically reduces the transaction price or even collapses the deal entirely. My advice: if you have decided to prepare a company for sale, it is better to start doing so two years before the sale, not two months.
A.J.: You work in financial law. Currently, banks are tightening requirements—AML, sanctions screening. Business representatives complain about bureaucracy. Is there a way to turn this compliance from a burden into a competitive advantage?
A.B.: It is a complex question, but the answer is yes. Today, transparency is the new currency. If your ownership structure is clear, and if you can document the origin of capital within the legally required period, you become a desirable client for banks and a reliable partner for dealmakers. Companies with "unclear" histories are simply being pushed out of the market. Therefore, investing in high-quality legal and financial compliance is an investment in the long-term survival of the company.
A.J.: In your career, you have experience not only as an advocate but also in insolvency and liquidation processes. You have seen businesses, so to speak, "on the pathologist's table." What main symptom of an approaching end do owners of seemingly stable companies most often ignore?
A.B.: Hesitation in making so-called "uncomfortable" decisions. Often, an owner sees that a particular business line is incurring losses or that the debt burden is becoming critical, but they continue to believe in a miracle, postponing restructuring.
Experience with insolvency proceedings has taught me that time is the most expensive resource. The sooner a company turns to specialists for restructuring or legal protection, the greater the chances of preserving the business. Ignoring a problem always costs more than acknowledging it.
A.J.: You are also an arbitrator. Why should a "Hotulanus" club member, when concluding a significant contract, consider including an arbitration clause instead of turning to a regular state court in the event of a dispute?
A.B.: There are three main factors: speed, confidentiality, and competence. Commercial disputes in state courts can drag on for years, and court proceedings are predominantly public. This means that private business matters can be "heard and overheard" right there in the courtroom without any barriers.
Arbitration, by contrast, is a closed process. Furthermore, and crucially, the parties can choose arbitrators who truly understand the specifics of their business—be it IT, logistics, or finance. This allows for a court judgment where the case is examined according to the law and the deepest essence of the transaction.
In-depth Legal Expertise for Business
Aleksandrs Jemeļjanovs (A.J.): Andris, in our conversation, we touched upon global M&A issues. Now I want to turn to the daily challenges entrepreneurs face. You represent client interests in courts. Often, an entrepreneur thinks an advocate is only needed when "everything is already on fire." What is your strategy: do we go to court to win, or do we go to court to reach an agreement?
Andris Bērziņš (A.B.): A good advocate is, first and foremost, a strategist. My goal is to minimize the client's losses. If a court process threatens to drag on for years and consume vast resources that the business could otherwise invest in development, I place special emphasis on the importance of both mediation and settlement. However, if the opponent is not ready for talks, representation in court relies heavily on an impeccable evidence base.
A.J.: Another "front" for business is the tax administration (SRS/VID). Conflicts with the tax service can paralyze a company. How should one correctly build a dialogue with the state when claims arise?
A.B.: With the tax administration, it is important to speak the language of numbers and documents, not emotions. My practice shows that a significant part of a problem can be resolved even by providing initial explanations, provided the legal position is well-founded beforehand. We help clients not only contest unfavorable SRS decisions but also build preventive defenses: structuring transactions to minimize the risks of SRS checks and audits regarding those deals.
A.J.: Let’s talk about accounts receivable. These are "blood clots" in the business's circulatory system. When is it worth moving from polite reminders to firm legal measures?
A.B.: My advice: never wait longer than one payment cycle. As soon as a delay becomes systemic—that is a signal. Working with debtors is not just about courts. It also involves skillfully prepared pre-trial warnings and the use of simplified recovery instruments. We help companies implement a system where the legal lever engages automatically. This disciplines partners.
A.J.: A very important topic—insolvency proceedings and LPP (Legal Protection Process/TAP). To many, LPP sounds like a sentence, but you view it differently. What is the real value of LPP for a viable business?
A.B.: If a company has temporary liquidity difficulties but a working business model, LPP allows for a "breathing space" from creditor claims and provides time to restructure debts. In a way, it is a legal shield that gives the owner time. My role is to prepare a legal protection plan that will convince the creditors and the court that the company must continue working. Conversely, in insolvency proceedings, our task is to maximize the protection of the client's interests, whether they are a creditor seeking to recover their money or an owner aiming for a correct business closure.
A.J.: Andris, thank you for this in-depth insight. Such expertise is of immense value to our club members.