What’s it all about?
Corporate lawyers provide legal advice to companies on significant transactions affecting their businesses. Such transactions are of the kind that you would typically see detailed in the Financial Times, and can take many different forms:
Mergers and acquisitions (M&A)
This is where a company is bought or sold. There are many different reasons why a purchaser would want to buy a company, but the two main examples are either to grow an existing business (by buying a competitor) or to diversify by acquiring a different business to that which it currently operates.
There is also a distinction between public M&A and private M&A. A public deal involves the buyer ¬acquiring a company listed on a stock exchange (and therefore whose shares can be bought and sold by individuals, known as retail investors). In a private M&A deal the buyer acquires a company that is owned privately by a number of individuals. Therefore, one key difference between public and private M&A is that a private deal requires a willing seller, whereas in a public deal the directors of the target company may reject the offer from the buyer – in which case the buyer may still try to buy the ¬company anyway. This is known as a hostile takeover and such deals usually attract a lot of publicity. Another distinction is that private deals tend to be less regulated than public deals.
Initial public offerings (IPOs)
An IPO involves the owners of a private company selling some of the shares in it to big financial ¬institutions (such as pension funds) and to retail investors by listing the company on a stock exchange, as a result of which it becomes known as a public company (or, in the UK, a “plc”). Again, there are different reasons why the owners of a private company would want to do this, but the two main reasons are either to enable them to raise money for themselves personally or to raise money in order to be able to expand the company’s operations and, hopefully, become more profitable as a result. Once a company’s shares are listed on the stock exchange it enables investors to buy and sell them at the price that is determined by the market.
Joint ventures (JVs)
A JV is where two or more parties enter into a form of business partnership. Both parties will contribute assets to the JV and will run it together as a separate business. A party may enter into a JV because it believes the business will be more successful if it is run in partnership with another party – if, for example, the two parties own different but complementary assets that can be contributed to the JV.
The working culture
Corporate law is mainly transaction-based. Therefore, the hours that corporate lawyers work can vary depending on the particular needs of the client and the stage the transaction is at. Corporate lawyers may well need to work late into the evening towards the final stages of a transaction and, while this can be quite demanding, it is extremely satisfying to help a client conclude a deal successfully.
Within a law firm itself, the emphasis is very much on teamwork. Corporate transactions are often large and complicated, with many different elements and workstreams. Working in a team is essential to be able to provide legal advice to a client in a timely and efficient manner to help get the deal done. Corporate lawyers often have to manage large teams of specialist lawyers in lots of different departments within their own law firm.
Corporate lawyers need to be able to analyse complicated legal issues and provide legal advice to a client in light of the legal rules and regulations, which will assist the client in achieving its commercial goal. An important skill is the ability to distil down complex areas of law into an easily digestible format for clients. Corporate lawyers also need to be able to draft legal agreements setting out the commercial deal, with the complexity of the agreement usually being determined by the complexity of the deal.
The corporate sector is constantly evolving and is inevitably affected by developments in the wider economy. As a result of the recent economic downturn companies have been finding it more difficult and expensive to borrow money from banks, resulting in them having to consider the deals they want to do and, if buying a business or significant assets, the price they are willing to pay.
Companies are also affected by changes to the legal regime governing them. The Companies Act 2006 has been coming into force in stages in the past few years, and has changed several areas relating to how businesses are run and what they can do.
Graham Phillips and Sumit Indwar are managing associates at Linklaters.