Posted on 20th January 2021 — Ennio Keyte
I am a junior associate in Baker McKenzie’s M&A practice, having qualified in March 2020, and now work in the firm’s China Group in London. During my final year of undergraduate study, reading Chinese and History, I received my training contract offer after having completed a summer vacation scheme with Baker McKenzie. During my training contract, I completed seats in Private Equity, Banking, Competition & Trade, and M&A, as well as undertaking a secondment with our Finance & Projects team in Beijing. Corporate M&A work appealed in particular because of the need to understand the commercial drivers of the deal and because one gets to know the target business very well. M&A is a fast-moving, intense and dynamic area, which is made all the more interesting by the collaborative nature that transactional work entails. I have set out below some thoughts on how the corporate department brings other practice areas together, the skills involved in that; and a few tips if you are considering a career in M&A.
Introduction to Corporate and M&A
Every firm divides practice areas slightly differently. Baker McKenzie’s Corporate group is organised into (i) Private M&A; (ii) Private Equity & Funds; (iii) Corporate Finance (i.e. equity and debt capital markets); (iv) Corporate Reorganisations (which focuses on large intragroup reorganisations – not to be confused with restructuring!); and (v) Energy, Mining and Infrastructure. I will focus on private M&A because this is the area with which I am most familiar and also because it is one of the best examples of bringing together other practice areas.
In the M&A team, we advise our clients on the buying and selling of companies but also joint ventures, governance issues and reorganisations. The acquisition / sale process can take the form of a share or asset sale (or a hybrid of both) and can be run as a bilateral or auction process. Although there are important differences between bilateral and auction sales, the stages of a private M&A deal can broadly be divided into multiple phases: (i) the preliminary stage (i.e. deal structuring considerations, first contact with buyer / bidders, confidentiality agreements; and, in the case of auctions, process letters, information memorandum etc.); (ii) risk assessment (i.e. due diligence); (iii) negotiation of transaction documents; (iv) signing and, often split, completion; and (v) post-acquisition integration.
Bringing together different practice areas
One of the key workstreams in an M&A deal, and one which many practice areas feed into, is due diligence of the target company. This will invariably be relevant when acting for a buyer but also when conducting vendor due diligence on behalf of a seller in an auction process. The scope of due diligence will depend on the specific deal, target and sector in question. However, generally speaking, a share sale will require more extensive due diligence because all assets and liabilities will indirectly pass to the buyer with title to the shares. In contrast, an asset sale may allow for more targeted due diligence in respect of the specific assets being acquired.
In addition to conducting corporate due diligence, the M&A team will be responsible for running the entire process. An important aspect of this will be identifying key areas to be diligenced and then liaising with the relevant specialist teams and offices. This exercise can often extend across multiple jurisdictions and thereby add an additional level of complexity in terms of project management but also transaction structuring (e.g. where multi-jurisdictional asset transfers and regulatory filings are required).
The specialist input required will depend on the deal but often one would be working together with employment (in relation to TUPE, employee transfers, union / works council consultations), pensions and employee benefits (pension schemes, employee share plans), real estate (assignments, leases, licences), IT & Commercial (IT infrastructure and services, commercial contracts, transitional services), Competition and Trade (merger control, foreign investment review, compliance), Banking (loan facilities, guarantees) and Intellectual Property (intellectual property portfolio, licences, assignments), Tax etc.
Regulatory considerations can be extremely important in determining the transaction structure and timetable. Our competition and trade team is responsible for conducting the merger control and foreign investment review analysis (which has become a particular hot topic in the context of the recently introduced National Security and Investment Bill) and any filings that need to be made. Depending on the industry in which the target is operating, there may also be sector-specific regulatory approvals, for example in the banking and pharmaceutical sectors. Although the regulatory analysis will be carried out by different departments, it is critical for us in the Corporate team to get our head around the implications of their analysis and the impact on the transaction. As mentioned above, this can impact the timing and structure of the deal (and, of course, the transaction documentation – for example, in terms of conditions precedent and allocation of risk).
Several skills are key to succeed in the M&A team. Legal expertise is mandatory (particularly knowledge in corporate law and drafting ability). We also look for team players, who can work under pressure and keep a positive attitude. In addition, excellent project management skills will be necessary to run effective due diligence and manage multiple parties, often across a multitude of jurisdictions in different time zones. We often encounter a diverse range of legal issues and considerations created by different laws and concepts in various jurisdictions. A general knowledge of other disciplines, a degree of agility and an appreciation for the bigger picture of the transaction are essential to successfully navigating the complex and sometimes unexpected turns a transaction can take.
Tips if you’re considering a career in corporate law
If you are interested in pursuing a career in corporate M&A work, I would recommend:
Ennio Keyte is an Associate at Baker McKenzie.