Interview subjects have asked to remain anonymous in order to feel comfortable providing candid answers.
Mergers and acquisitions is a hot practice in business, law, and consulting and one of the most requested banking groups for incoming investment bankers. ((Brian DeChesare, Mergers & Acquisitions Investment Banking: What You Do Every Day, Mergers and Inquisitions (Oct. 28, 2019, 8:52 PM), https://www.mergersandinquisitions.com/investment-banking-groups-mergers-acquisitions/.)) Like any practice or career, however, there are many pros and cons. This blog post will highlight some of those differences from the perspective of several attorneys who represent both the buy and sell side in these sorts of deals at some of the most prestigious law firms. There will be a focus on transactions dealing with innovative companies from the startup stage to maturity.
According to practitioners, the work is sexy, fast-paced, and high profile. Especially at large law firms, associates and partners work on large, complex deals that are often widely followed by people in the industry as well as the general public. Lawyers gain satisfaction in saying they were one of those involved on a particular deal and that they played a role in making it all come together. The work is also considered as interesting as it is complex, has a host of issues to troubleshoot, and attorneys see firsthand how companies come together and evolve. ((Telephone Interview with Partner (May 2019).)) However, an attorney cannot have thin skin as the work is exhausting, explosive, and usually on tight deadlines; attorneys sometimes review and revise contracts crucial to the deal in a matter of days. ((Telephone Interview with Associate 1 (May 2019).)) Moreover, a mergers and acquisitions attorney is privy to innovation, disruptive plans, and major purchases that can affect markets before these arrangements are even announced. For example, attorneys working at a law firm that has many big-business clients, especially in the technology and life science spaces, know about deals before the public, and some people certainly gain satisfaction having exclusive information – even more so if it will change certain business landscapes.
Another positive of the practice is that M&A attorneys are generalists. They are the “quarterbacks” of deals since they see all of the players and are aware of what each player needs to be doing and when they need to be doing it. ((Id.)) This allows attorneys to be “dangerous” in many practice area specialties ((Id.)) Lawyers typically consult specialists in other practice areas at their law firms because deals tend to have a host of issues that the firm must handle. Many of these issues are related to tax, intellectual property, employment and labor, finance, and equity. ((Id.)) As a mergers and acquisitions attorney, you are in contact with everyone in these practice areas, which makes you an expert on corporate issues (potential and present) and less likely to be strapped to one practice area at a firm. Moreover, this allows M&A attorneys to have the flexibility to move to other practice areas or specialize at a later date. ((Id.)) When working with startups in particular, attorneys are able to prime smaller companies and help them exit via acquisition since they are experts in many areas as well as experienced on handling deals from the buyer side. ((Telephone Interview with Associate 2 (May 2019).)) They can streamline the process and advise these companies on the best course of action. ((Interview with Partner 1, supra note 3. )) Also, junior attorneys that support emerging companies in their M&A practice as well are able to have a strong client interaction and advisory role since these companies typically do not have the means to pay high fees. Junior attorneys are able to make dreams into realities for entrepreneurs and run entire deals again, due to the limited funds of these companies. So that means substantial training early on for new associates and increased opportunities to build a book of business (if the client grows and is not acquired).
M&A is also one of the only law practices at big firms where you can have twenty to thirty-hour work weeks. ((Interview with Associate 2, supra note 2.)). When a deal is not being worked on or concludes, attorneys are usually free. Some take days off and others come into work late and leave early as there is not much work for them in the few days post a closing Lastly, this type of work is less likely to dry up during recessions because companies that are still succeeding acquire those that are not doing so well since they are able to secure them at lower prices with a better deal package. ((Interview with Associate 1, supra note 4.))
Of course, just as with any career, there are some challenges to being an M&A attorney. According to the attorneys interviewed, there seems to be just as much cons as pros for being an M&A practitioner. I discussed the fast-paced and exciting work life earlier to highlight the varied nature of the work, but that has its own host of negatives. Due to the explosive and time-sensitive nature of mergers and acquisitions work, as well as not knowing when a deal will come through the door, attorneys can work upwards of 80 hours a week for a few weeks at a time just ensuring a deal gets done on time and with proper due diligence. ((Interview with Associate 2, supra note 2.)) This causes many mergers and acquisitions attorneys to cancel weekend plans (even if planned well in advance) and work around the clock since deals are on short timelines and have many moving parts. Also, due to the amount of work required, attorneys can often only work on one transaction at a time, which is limiting. ((Id. )) If an attorney is working on a more interesting assignment with several clients, a mergers and acquisitions deal will take priority since these deals generally bring in substantial profits for a firm; this can limit the range of clients the M&A attorney gets to work with. In addition to that, deal teams are normally very large, so intensive collaboration is required amongst most if not every member of the team. This also makes the work much more adversarial, particularly in the case of working for a large company in a public deal, since opposing teams are large as well. ((Id.)) Attorneys on these deals have less of a client advisory role and more of an executioner role like investment bankers – getting the deal done and getting the best deal terms for your client. ((Interview with Partner 1, supra note 3.))
Furthermore, attorneys working in mergers and acquisitions are not true specialists. Again, they are generalists with knowledge on a host of corporate issues, but they might be less knowledgeable in specific points of law. ((Interview with Associate 1, supra note 4.)) This is limiting for these attorneys because they are Jacks and Janes of all trades, but masters of none, so this requires them to constantly look to their teammates for expert advice, which is critical to the success of a deal.
Moreover, when working with some types of clients, mergers and acquisition attorneys are put in certain predicaments that make the deal process a bit more difficult as well as strain on client relationships. In many private deals, specifically where a private company is being acquired and the attorney represents the sell-side, you are working for founders, CEOs, and management. ((Interview with Partner 1, supra note 3.)) Focusing on CEOs and management, some of them are typically commonstock holders. This is especially true of upper-level management that did not help in the founding of the company, which means that they will not get a weighty check from the deal. Since they are working directly with the attorneys in some cases, they often ask for employment packages as part of the deal. These packages usually are agreements made for the acquirer to hire the management as part of the team and continue running the business or help run the merged departments. ((Id.)) Attorneys are now in a dual role with two missions: get the company the best deal and secure the management team’s job. ((Id.)) This can create conflict as the management team is rightly self-interested in these situations. They know they will be likely losing their job once the company is acquired and they want to ensure that they are taken care of after an acquisition. In some cases, however, the purchaser will take on upper-level management, the founders, and CEOs because of their efficacy in running the company and growing it to a level of envy. A prime example is the Walmart-Jet deal. Walmart hired the entire team running Jet and left Jet as a separate entity. Jet will still operate as Jet.com but the earnings and profits will be Walmart’s as Walmart’s products/supply may integrate into the e-commerce platform. ((Walmart Has Completed Its Acquisition of Jet.com, Fortune, (Oct. 28, 9:37 PM), https://fortune.com/2016/09/20/walmart-acquisition-jetcom/.))
Furthermore, working on the sell-side of a smaller private company or startup can result in missed opportunities. If a startup that is represented by a firm that has potential ends up being acquired, firms and lawyers lose a client as the buyers will very likely not switch counsel. ((Interview with Partner 1, supra note 3.)) Now, if a firm or a group of attorneys somehow own equity of a startup, that can prove to be a lucrative endeavor if the company is bought out and attorneys are collecting fees from their work on the transaction. However, this is a semi-controversial topic because getting the best deal for your client can conflict with getting the best deal for the law firm.
Attorneys who work at larger firms that represent both emerging and mature companies also run the risk of harming smaller client relationships. In the startup world, every milestone is celebrated, and those who have helped these companies get to the next level are invited to the festivities celebrating the successes. ((Id.)) Attorneys at larger firms who work frequently work on deals will likely miss these achievement events, which can leave a bad taste in the client’s mouth even if they understand that their attorney is very busy. ((Interview with Associate 2, supra note 2.)) This communicates to smaller clients, even if not intentionally, that the firm does not care about their accomplishments and that they are a lesser priority.
Lastly, in some instances, culture can be the biggest con. Since the practice can be very demanding, exhaustive, and consuming, a negative law firm culture can exacerbate every single con mentioned above. Toxic co-workers and adverse group morale and dispositions will certainly affect all of those who are on the team since it is almost impossible to not work with each other to get the deal to closing. Since the practice differs from firm to firm, the atmosphere can affect one’s enjoyment of M&A work. So, it is wise for attorneys to try to distinguish firms in terms of how the culture morphs during deal work because, again, the culture of a firm can certainly ameliorate the effects of the oppressive cons if an attorney finds the right fit, which is easier said than done.
In my opinion, the pros certainly outweigh the cons, but these are a unique set of practice-specific considerations; one would need to ask what they are looking for in a legal career and then see if there is a match. Of course, not all positives and negatives are discussed here, but this captures opinions from three attorneys who are in the field in both Silicon Valley and New York City, where the overlap is significant. Those who enjoy the skillsets used in M&A and the new challenges and enjoyments of working with small and mature innovative companies could find a happy medium. The ability to gain substantive work early on, as well on work on major transactions, can be a very rewarding duo.