What do companies such as Vodafone, Time Warner, and Kraft have in common? Well, apart from being major international businesses, they have all been involved in high-profile mergers and acquisitions. These M&As have had hugely varying levels of success, with Vodafone successfully growing into the world’s largest mobile operator, and a massive drop in valuation following the merger of AOL and Time Warner.
With the huge impact and complexity of such deals, there’s no denying the vital role played by M&A lawyers. Such legal professionals are typically expected to work in collaboration with deal stakeholders to see such transactions through to a successful conclusion. It’s a high-pressure role involving the arrangement of finance and provision of advice specific to the drafting, negotiation, and finalization of make-or-break contracts.
M&A lawyer job descriptions generally specify the need for:
- Membership of a state bar
- Extensive corporate law firm experience
- Excellent written and verbal communication
- Strategic mindset
- Ability to manage multiple tasks
- Conscientious and organized approach to work
- Ability to work at speed and under pressure
Key Duties of M&A Lawyers
An M&A lawyer might take on a number of responsibilities when working through a merger or acquisition. Such responsibilities are often fulfilled by lawyers with specific M&A expertise, rather than generalists. M&As are complex and there are a lot of specialized and meticulous duties that must be performed over many months or years to ensure that they are executed for mutual benefit.
Making annual salaries of anywhere from $$110,000 to upwards of $450,000, M&A Lawyers might assume the kinds of specialized roles listed below:
M&A lawyers are expected to work in an advisory role from the very beginning of the process. They will carry out research into both the acquirer and target company — analyzing the financials and identifying the assets and liabilities of each party. In this situation, they take a high-level view, looking for red flags and obvious issues that will delay (or even kill) the M&A transaction. In the advisory capacity they work with other lawyers and executives; sharing process updates and watching for trouble.
M&A Lawyers might assume these advisory duties:
- Carrying out due diligence for the identification of legal risks and liabilities.
- Giving guidance on legal compliance, which may include laws of security, antitrust and foreign investment.
- Structuring the M&A deal for the client’s benefit, accounting for business goals, tax implications, and other legalities.
- Assessing legal risks and suggesting strategies for mitigation (which might include legal processes, representations, warranties, and other protective measures).
While M&A lawyers may not act as mediators in the traditional sense, they are often expected to manage communication between various stakeholders and executives. They may analyze the data in consultation with accountants, bankers, real estate brokers, and other parties; ensuring that the merger or acquisition is right for all involved. Acting in the mediatory capacity, M&A lawyers must rein in and manage all of these people. They have to take responsibility for the protection and sharing of the parties’ information, and often will ensure the virtual data room used to house and share sensitive data related to the transaction is configured correctly.
M&A Lawyers might take on these mediation duties:
- Helping to resolve disputes, which might be related to purchase price changes, representations, indemnification, and other contractual matters.
- Managing conflicts of interest to ensure that the integrity of the M&A transaction is maintained.
It is vital that M&A lawyers take on the negotiator’s role — ensuring that both sides and subordinate groups come to agreeable outcomes. Such outcomes will normally be achieved following a discussion with the opposing negotiator, with details such as terms, timelines, and goals being hammered out. While negotiation usually happens early in the process, the parties might come together at different stages to smooth things out and reach the most ideal resolutions.
Negotiation duties of the M&A lawyer might include:
- Developing negotiation strategies that align with the client’s business goals and legal interests.
- Preparing for negotiations with the research and analysis of relevant documents, assessment of legal risk and opportunities, and anticipation of challenges or legal objections that might be raised by the other party.
- Advocating in the client’s best interests and negotiating the most agreeable terms.
- Arranging the documentation and communication of any agreements reached.
A drafting team will typically complete most of the paperwork that goes into a merger and acquisition. This will include term sheets, contracts, opinions, letters, registrations, government applications, and other important documents. There is always more than one drafter, with the entire team working out the minutiae of the deal, which is part of the reason why using reliable and straightforward VDR software like CapLinked is key.
A drafting M&A lawyer might be expected to perform these duties:
- Documenting the terms and conditions of the deal, including the purchase agreement, representations, closing conditions, and other key legal provisions.
- Drafting and reviewing due diligence documents, which might include request lists, and questionnaires.
- Writing up and reviewing corporate governance documents, which may include board resolutions, shareholder agreements, and other corporate documents.
- Drafting a range of ancillary documents, which might include employment agreements, non-competition agreements, transition services agreements, and escrow agreements.
- Preparing and reviewing post-transaction documents, which may include post-closing certificates, releases, and other documents specific to the finalization of the transaction.
Areas of Expertise
M&A Lawyers must have a sound understanding of corporate, contract, and fiduciary duty regulations at the state level as well as securities law at the federal level.
Their knowledge should extend to:
- Corporate law and governance. The M&A lawyer should have a good understanding of the make-up and legal implications of various corporate structures and entities. They must also be able to advise on governance issues, corporate compliance, and risk management.
- Security regulations. It is vital for M&A lawyers to be familiar with laws and regulations such as the Securities Act of 1933 and the Securities Exchange Act of 1934. This knowledge will apply to securities registration, reporting requirements, disclosure obligations, insider trading, and other securities-related issues.
- Tax law. There must be a firm understanding of tax laws and regulations, including corporate tax, capital gains tax, and other relevant tax implications in order to advise clients.
- Contract law. Proficiency in contract law will be essential for the drafting and negotiation of agreements specific to acquisitions, joint ventures, shareholder responsibilities, and other aspects of M&A.
- Intellectual property law. M&A lawyers should understand key aspects of IP law relating to due diligence, ownership and rights, valuation, representations and warranties, and general regulatory compliance.
- Antitrust law. M&A lawyers may provide clients with advice on aspects of antitrust law including merger control, compliance, litigation, and enforcement.
- Employment law. The M&A lawyer should be able to provide information and guidance on aspects of employment law such as employee transfers, benefits and compensation, labor relations, and general compliance.
- Environmental law. M&A lawyers working with clients in regulation industries and with environmental liabilities should have particularly good knowledge of relevant permits, reporting requirements, insurance, due diligence, and other aspects of environmental law.
When to Hire an M&A Lawyer
It is advisable to hire an M&A lawyer as early as possible in the process, even before the formal initiation of the transaction. This should ensure that the legal aspects of the transaction are properly addressed and that the parties’ interests are protected. Without such legal support there will be a risk of minor errors and negligence with the potential to end the transaction.
The M&A lawyer may give valuable advice on how best to structure the transaction, carry out due diligence, and identify any risks and opportunities. Businesses may benefit from the M&A laywer’s guidance in the negotiation of complex legalities and documents for the best chance of arriving at an agreeable deal.
An M&A lawyer may support the following types of transactions:
- Traditional mergers and acquisitions
- Joint ventures
- Strategic alliances
- Equity investments
- Restructurings and reorganizations
- Cross-border transactions
- Distressed M&A transactions
Various factors should be considered before the final selection of an M&A lawyer. They will ideally have a great amount of experience, with a track record of successfully closing similar deals. They should also assure you of open communication and a transparent fee structure. A good level of trust should be established as it may be some time before your M&A transaction is finalized.