A career in mergers, acquisitions (M&A), and investment law, one of the most challenging but rewarding careers that the legal profession has to offer. Are you ready for it?
It is a vast area of study, but we are working on the Pareto Principle, or the 80/20 rule, which basically states that you can be highly successful if you can spot those 20 percent opportunities that produce 80 percent results. Or to put it more formally, “for many outcomes, roughly 80 percent of consequences come from 20 percent of causes”.
So the idea is to guide you on exactly what skills to learn in order to quickly begin practical legal work in this domain.
What if there are 20 skills that M&A and investment lawyers use for 80 percent of their daily work? What if there are 20 chapters you can read that help you to start working with confidence? While we do not wish to restrict you to that, if you can identify that small core that enables you to start your professional journey in this domain, that would be a game changer, right?
So what exactly do M&A and investment lawyers do?
An M&A and investment lawyer is involved in virtually every aspect of a deal or transaction from beginning to end, though they may not actually participate in setting a purchase price, for example, or in post-closing integration. But here are some of the more important functions they do participate in:
Deal structuring: How is the deal to be done? What are the main commercials? Should the buyer company purchase shares from the promoters or should the target company issue more shares? What is the percentage of shares to own when the transaction is done?
Which type of shares or securities should they invest in? How will they pay the consideration – directly or through a subsidiary company?
What about existing third-party vendors and suppliers? How to formalise the relationship with them?
These are some basic questions that have to be answered at the deal structuring stage, and the work involves coordination between M&A lawyers, bankers, and senior executives.
Legal due diligence: So once the deal is structured, for example, and your client is the buyer, you will need to check if the target company has major pending litigation or penalties, whether all important licences and documents are in order, and other issues that can impact the future of the deal.
This is a really important role because the results of your due diligence may determine whether an investor will finally invest. Or say if a huge loan that is sought to complete the transaction will be forthcoming.
Likewise, a buyer company may either back out of the deal or offer a reduced valuation based on the results of your due diligence. In short, you decide whether the deal value is worth it.
Documentation and negotiation: Once the deal is decided upon, it will need to be sealed by signing of documents, of which there will likely be a long list, and which you will have to draft and negotiate. Some of the more important ones are loan agreements, shareholders’ agreements, share purchase agreements, business transfer agreements, etc.
Both buyer and target will have their own versions of the agreements, and you will have to monitor the negotiations to arrive at a mutually agreeable version.
Ensuring deal compliance: This is yet another very critical function. The deal between buyer and target will require compliance with certain laws and regulations, and failing to do so may result in heavy fines and other punishments.
For instance, if your investment round involves foreign investment, you have to file a FCGPR Form required by the RBI, within 30 days from the date of issuance of the equity instruments.
In a nutshell, you will be providing advice on disclosure obligations under applicable finance and investment laws and securities exchange standards.
Your knowledge must be in depth
The above are only some of the aspects you will need to cover, but as you can see, you will play a significant role in financial and operational decisions involving big industry players, and deals that run into hundreds of crores.
For those who choose the highly exciting and lucrative M&A career path, you will realise that your role is that of both analyst and strategist. You are analysing information, managing risks, and solving a multitude of problems, mostly on a tight schedule.
It’s about spotting the right opportunities at the right time, selling the opportunities, creating a deal structure that pleases everyone, and making sure the deal remains a success beyond the drafting table.
Which is how successful M&A and investment lawyers can make difficult transactions happen smoothly, are paid handsomely, and become part of news-making deals.
How does one become an M&A and investment lawyer?
For those who equate M&A lawyers with the likes of Harvey Specter or Mike Ross in the TV series Suits, I feel it necessary to add that like all other professions, becoming a successful M&A lawyer involves a gradual climb up the corporate ladder.
After completing law school, you can apply for jobs in corporate law firms that carry forward M&A transactions, but the conventional education system fails to impart the practical knowledge required to succeed in the fiercely cutthroat world of corporate mergers and acquisitions.
If you haven’t been able to secure internships but want to pursue a full-time career as an M&A lawyer, you will definitely need additional practical guidance to help you gain the requisite expertise.
Contrary to apprehensions, the Covid pandemic has actually boosted the worldwide market for M&A and investment lawyers, as you will have read in one of my earlier emails. So this is the perfect time to invest time and effort in a career as an M&A lawyer.
You can move from litigation and other practice areas into M&A and investment. However, it is incredibly hard to make this transition without proper skill training, building a track record, and developing relationships.
I have come across many law students who want to become an M&A or investment lawyer, but fail to secure even an internship with the right law firms. So it pays to learn relevant skills, build a relevant track record, get an internship at a boutique law firm, go on to a larger law firm, and eventually get a pre-placement offer in a big or boutique firm.
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