INTRODUCTION:
A Merger & Acquisition (“M&A”) event is an evolutionary milestone in a company’s lifetime. It impacts the organisation’s human resources, governance, customer relationships, intellectual property, control and management.
Attorneys who specialize in M&A ensure that laws are followed when a company merges with another or acquires another. An M&A lawyer may work for a company in-house or, more commonly, as a lawyer for an outside firm and have a good understanding of both central law and state laws.
Among other areas, M&A lawyers are required to understand tax law, employment and labour law, environmental law, antitrust, intellectual property, and corporate finance. They handle every aspect of sales and purchases, including drafting and reviewing contract documents, permits, memorandums, and transaction agreements.
STATUS OF M&A IN INDIA:
With an increasingly liberalised economy and related factors such as technological advancements, greater access to capital, and reduced barriers of entry, the Indian growth story has contributed to a surge in M&As and transformed the country’s M&A landscape in recent times.
Despite threats posed by the global COVID-19 pandemic, regional tensions in India, and uncertainty surrounding the U.S. presidential election, Indian Mergers and Acquisitions activity continued to prosper in certain respects during 2020.
On June 10, 2021, the Times of India reported that with nine (09) deals, Information Technology (IT)leads in volume of mergers and acquisitions, while energy and natural resources lead in value.
ROLE OF AN M&A LAWYER:
Lawyers are often faced with a plethora of challenges in M&A deals, from negotiating with regulatory bodies to making sure the interests of each party are protected. From simple acquisitions where assets are sold at an auction to complex multi-party cross border M&As, there are different scenarios.
M&A professionals will need to address the following questions:
- What would create value for shareholders from a proposed combination between entities?
- How realistic are the assumptions for the future?
- When is the right time to buy the target company?
- Could the potential rewards be deemed adequate compensation for the risk taken?
Apart from the involvement of subjects like SEBI (Substantial Acquisition of Shares and Takeovers) Regulations, 2011 (the takeover code), Income Tax Act, 1961 (taxation law), Foreign Exchange Management, 1999 (FEMA), etc, there is a lot of work that has to be done by attorneys which are not mentioned in any statute, for example:
- Regulatory requirements: The proposed transaction might require mandatory approval by the Reserve Bank of India or the Competition Commission of India.
- Due-Diligence: Performing due diligence on big conglomerates that have entered into thousands of contracts, have several vendors and need to comply with several appropriate statutes and regulations.
- Documentation: An M&A lawyer prepares documents/agreements/contracts such as Shareholders’ Agreement, Non-Disclosure Agreement, Letter of Intent, Asset Purchase Agreement, Business Transfer Agreement, Intellectual Property Agreement, etc.
- Advising on Closing: The chances of the deal weathering the storms of implementation increase if the lawyers and other professionals lay solid foundations for it.
- Wide ability: The lawyer deals with all sizes of businesses, including financial and management buyouts, spinoffs, restructurings, divestitures, cash transactions, tender offers, going private, and exchange offers.
- Negotiations: The most important role an M&A lawyer does is negotiating a deal. The respective lawyer negotiates while keeping in mind the best interests of the organization and all the potential consequences of a decision by members or directors of the company.
WHAT ARE THE TOP SKILLS AN M&A LAWYER SHALL POSSESS?
M&A professionals must acquire the following skills to be experts in complex business transactions:
- Analyzing information: Lawyers handling M&A cases need to be capable of processing vast amounts of information efficiently and quickly.
- Negotiation: With excellent negotiating skills, the M&A lawyers help their clients and the target companies to reach a deal that will create a ‘win-win’ situation.
- Risk-taking: Lawyers are expected to assess the nature and extent of the risks involved, and to guide their clients in navigating ahead of any problems that may arise from the respective transactions.
- Business awareness: Business awareness is a key requirement. Furthermore, the lawyers shall be able to provide a comprehensive analysis of all aspects of the business, including all the advantages and disadvantages of performing the merger or acquisition.
- Time management: Time management is an asset for any aspiring M&A lawyer. They are often required to work on a short clock.
- Problem-solving skills: The lawyer shall possess essential problem-solving skills to resolve issues of his client amicably.
HOW TO BECOME AN M&A LAWYER IN INDIA?
The following are the must-have qualification to become an M&A lawyer:
- Education: Accounting, finance, law, strategy, and business knowledge are all needed to practice mergers and acquisitions. It is not necessary to have a graduate degree, but many M&A professionals hold an MBA and a law degree. The Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA) are the two certifications that can also boost your prospects in an initial M&A career.
- Bar exam: Pass the All India Bar Examination (AIBE) after graduating from law school. This is a pre-requisite for practicing in an Indian court of law.
- Experience: Develop as much experience in the M&A field as possible, either by doing assessment internships or by working at a law firm.
- Additional learning: Continue learning to further your experience and expertise in the form of a diploma and professional development programmes in M&A, or pursuing Masters in Law (LLM) in the field.
CAREER OPPORTUNITIES IN M&A:
- Counsel at law firms: In addition to Tier I law firms, there are other law firms with dedicated Mergers and Acquisitions teams. Attorneys in this field help companies obtain financing and draft contracts for purchasing other companies.
- Counsel at PE firms: Private Equity firms need lawyers to help them allocate available funds to the right companies. To adequately protect the interests of their clients, the financial advisor needs the lawyers to comprehend not only the transactions but also the provisions be put into the documents.
- In-house counsels: Several big size Indian companies acquire companies abroad and vice-versa. In-house lawyers are required by these companies since law firms are usually too expensive to keep on a retainer.
CAN YOU BE A GENERAL M&A LAWYER?
You need to decide whether you want to be a general corporate lawyer or want to concentrate on a specific sector.
As an associate in a law firm or in-house counsel, your objective should be to try and gain as much exposure as you can while working in a transaction.
The number of deals under your belt will give you much-needed confidence moving forward if you choose to specialize, for example, you can work as a corporate lawyer for chemical companies, or pharmaceutical companies, or IT companies, etc.
As far as M&A practice is concerned, globally this area has only grown over the past several years as new fields and specializations have emerged. Remember, the key to becoming an excellent M&A lawyer is to ‘gain maximum exposure.
CONCLUSION:
For an M&A lawyer to be successful, you need not only knowledge of the law; you need negotiation skills, people skills, and a sound understanding of how a business works.
An LLB degree arms you with the fundamental knowledge necessary to enter the M&A space but what will set you apart or what will set you up for the long run is a commercial bent of mind, and an earnest drive to build a superlative skill set. Therefore, it is important for you to know everything about the company you represent including, but not limited to, its sectors and its operation and competitors. In general, you should be inquisitive about the company and have a working knowledge of all the applicable laws.
A sound theoretical base for working on commercial contracts coupled with experience in handling commercial disputes will give you an edge when you assess the company’s M&A transactions.
YLCC would like to thank Nikunj Arora for his valuable inputs in this article.
