Mergers and Acquisitions (M&A) is probably the practice area whose transactions you most often see on the front page of the business section of the newspapers.
The work is exactly what it sounds like – merging, demerging (i.e. separating), buying and selling of companies and their assets. You will also become experienced in the formation and restructuring of companies and with joint ventures and strategic alliances.
M&A quite frequently involves a cross-border element, and is therefore a department found in the large international firms and major City firms. Transactions can be public (when they involve companies listed on a stock exchange) or private (when they involve companies privately owned by individuals) in nature. The M&A department of a firm usually also handles private equity-financed transactions.
As an M&A lawyer, your clients will span an extremely broad range of industries, from automotive to media and entertainment to mining. Certain law firms may choose to focus their M&A work in several specific industries, such as energy, communications, and technology only, for example.
Clients will not necessarily be large companies – many of them will be smaller growing businesses or the smaller branches of large companies. You will represent buyers and sellers, as well as the financial advisers who structure the entire merger or acquisition process.
What does a corporate lawyer do?
As a trainee in the M&A group, you would probably spend a large amount of your time conducting due diligence, generally the first stage of any M&A transaction. Due diligence is the investigation to check the accuracy of information passed from the seller to the buyer or from the company raising capital to the investor. It endeavours to ascertain the financial performance of the company, the status of its assets, whether there are any outstanding debts or legal claims that could prove problematic, and whether there are any environmental, intellectual property or antitrust liabilities that could affect the value of the company going forward. Due diligence involves sifting through and reading vast quantities of paper or online documentation within a tight time frame. At times, you will be asked to travel to the client’s offices in order to conduct the due diligence onsite.
If you represent a buyer in an acquisition, there are usually two significant stages: The auction process leading up to the bid and hopefully, the acceptance of the bid; and secondly, the process leading to the eventual acquisition of the target company.
Both stages have severe time pressures, but the auction stage more so than the second stage. You will also find that your clients’ expectations of the quality of your work will be much higher during the auction stage, since there will be a lot riding on winning the bid. In the auction stage, client confidentiality is paramount. If you happen to represent the financial adviser in an acquisition, when sending out emails and other correspondence, especially en masse, it is important to ensure each recipient of the communication cannot see or otherwise ascertain who the other bidders are. If a bidder knows the identity of other bidders, or even the identity of their legal advisers, they will have a better idea as to the amount of the bid and the type of package their competitor is putting together and can trump that in order to win the bid. At the second stage, the period of most intense pressure will be shortly before closing, when doing the final negotiations of the sale and purchase contracts.
What skills are required?
Compared to other practice areas, M&A lawyers need to be more generalist in their knowledge and work closely with other specialist departments. Each transaction consists of different components that require input from practice areas including tax, capital markets, real estate, employment, pensions, antitrust, regulatory, environment and intellectual property.
As an M&A trainee, you could possibly forward the necessary documents to, for example, the tax lawyers who have been assigned to your transaction and asking them to review and spot any potential problems. However, as you progress through the ranks, you would need to know enough about all the above practice areas either to flag up any potential deal obstacles to the client at an early stage before the client is completely committed to the deal, or to flag up any issues your junior lawyer might have missed during due diligence.
In addition, as a mid-level M&A lawyer, you need outstanding organisational skills to co-ordinate lawyers across the firm; as well as excellent inter-personal skills to cultivate good working relationships with the specialist lawyers in the other practice areas, since you will almost completely rely on each of their various areas of expertise in order to close the transaction. Last-minute specific problems are likely to come up requiring that you persuade them to work under very tight deadlines in order to give you the advice you require.
More than in other practice areas, in an M&A department the workflow is very cyclical and the hours very unpredictable. You could be going home at 5 every evening having done nothing all day, or you be working until 5 in the morning on a deal. Some individuals thrive on such drastic peaks and troughs, and enjoy putting all their energy and time into several transactions simultaneously, then have a ‘slow’ period once those transactions have closed to completely unwind; before the process begins again with another set of transactions on similar timetables. You therefore need a great deal of work stamina. Other individuals prefer a more predictable lifestyle with less ebbs and flows, in which case, M&A is probably not the practice area for you.