MERGERS AND ACQUISITIONS
WRITTEN BY EILEEN LUO
Mergers & acquisitions (M&A) is a transactions-focussed area of commercial law. Lawyers working in this area will usually work on M&A, capital markets and advisory matters; M&A is a small facet of a commercial lawyer’s job. A lawyer working in this area may also refer to their work as transactions or corporate markets law.
M&A refers to the transactions that take place between two companies combining in some form. While a merger involves two companies combining to form a new single entity, an acquisition involves one company acquiring another. Deals to complete a merger or acquisition can be friendly or hostile, depending on the approval of the target company’s board. M&A as an area of law is highly related to Corporations Law and Competition Law. The Competition and Consumer Act 2010 (Cth) prohibits mergers that would have the effect, or be likely to have the effect, of substantially lessening competition in the market. The ACCC can authorise a proposed acquisition if it is satisfied it meets the statutory test. A recent M&A deal that has been of great interest in the legal industry is the Vodafone and TPG merger (Vodafone v ACCC) that took place in 2020.
CAROLINE TAIT
Special Counsel, Baker McKenzie
Caroline Tait is currently a special counsel in the Corporate Markets group of Baker McKenzie. She has a wide range of experience working in mergers and acquisitions law and corporate market matters. Since graduating from Monash University with a Law/Banking and Finance degree, Caroline has worked in New York amidst the Global Financial Crisis and Australia in a number of commercial law roles. Keep on reading to learn more about Caroline’s incredible experiences!
INTERVIEW
How would you describe mergers and acquisitions law to someone who knows little about the area?
Mergers and acquisitions is a term of art that generally refers to the buying and selling of businesses. In Australia, the types of transactions that a mergers and acquisitions lawyer will undertake is quite varied.
Currently, I am a special counsel at Baker McKenzie and work in the corporate markets team. This encompasses work across mergers and acquisitions (public and private), capital markets, private equity and corporate advisory matters.
As a Corporate Markets lawyer, my work includes the following:
Private business acquisitions and sales where an entity enters into a contract of sale to purchase the shares or assets of another entity. This may involve the acquisition/sale of all or part of a business.
Public mergers and acquisitions are regulated by the Corporations Act. This includes on-market and off-market takeovers, and also schemes of arrangements. This area of law is heavily regulated with many aspects prescribed by the Corporations Act.
Capital markets matters where entities seek to raise capital on the stock exchange. This encompasses primary capital raisings where entities raise equity for the first time on the stock exchange (via an IPO), or secondary capital raising if the entity is already listed and wants to raise more capital. Law firms will assist listed companies with all aspects of the capital raising, including the public disclosures required to be made and other regulatory aspects relevant to the capital raising. The law firm may also assist the entity with other associated aspects, such as underwriting arrangements.
Separate advisory includes advising an entity’s board where it is undertaking corporate actions and needs advice in relation to these actions.
In a corporate team at a law firm, lawyers execute a variety of corporate work across all industries, including healthcare, technology, manufacturing, metals and mining and so forth. Lawyers may choose to specialise in a particular industry. For example, having worked at JP Morgan, I have expertise in the financial services industry and I enjoy representing clients in that industry.
What sort of work do you do in your role?
Let’s say a law firm is representing a client that wants to buy a business. As part of our role, we will assist with legal due diligence – i.e. where we will examine the legal aspects of the business (including material contracts, regulatory aspects, compliance etc). As part of that process, expert groups within the firm may be engaged to assist with the review of relevant documents- such as the intellectual property, real estate or employment teams. The transactional lawyer (ie. the mergers and acquisitions lawyer) will collate the results from the various practice groups and provide the client with a due diligence report which identifies certain key risks associated with the business.
The mergers and acquisitions lawyer will also assist with structuring the transaction, and with preparing and negotiating the transaction documents. We will also assist with the execution and implementation of the transaction. All the information obtained in the due diligence process will be relevant to identify what risks and other factors need to be addressed as part of the transaction. A transactional lawyer has a really interesting role whereby where they facilitate the transaction and coordinate with a lot of different groups.
There’s no formula in terms of what you do day-to-day. On an ordinary day, I might spend my time taking calls, sending emails, reviewing and drafting documents. You don’t spend all day negotiating with other parties. A lot of things you do now are not face-to-face. Sometimes, you’ll be on a call and negotiate with other parties and you’ll usually get instructions from a client through phone or email.
On a deal, you’ll be juggling a lot of issues. Each issue needs to be resolved, and the right person or right lawyer with the appropriate expertise needs to be assigned to the issue. It’s like a law assignment or exam – you have to conduct research and understand the issue and whether it’s a commercial question or a legal question. If it’s a commercial question this usually involves a decision the client is thinking about making and you’ll provide advice related to that. If it’s a legal question, you’ll do your research and present your facts to the client who will ultimately use your advice to make a decision.
When you are a transactional lawyer and are working on an ongoing transaction, you are expected to assist the client when required and have to be responsive to their needs. The reality is you can work very long hours and you may work weekends. The hours that a transactional lawyer may work are often unpredictable.
“I went to New York for 5 years...I was there for the GFC which was the most incredible opportunity from a work perspective.
You have some incredible work experience! Could you walk us through some of the work you undertook before working at Baker McKenzie?
I started off doing my articles at Mallesons (now King Wood Mallesons), then worked in Melbourne for a year, joining their corporate team. I then moved to Sydney for different opportunities and stayed there for a couple of years working at Mallesons. During my time in Sydney, I completed a secondment for around 6 months at AMP Capital Investors. I assisted AMP Capital Investors and its joint venture partner Macquarie Bank with an ASX listing of some infrastructure assets.
After working in Sydney for around 3 years, I worked in New York for almost 5 years. I sat the bar exam there and worked at 2 law firms - Davis Polk & Wardwell and Weil, Gotshal & Manges. I loved it! I was there for the GFC which was the most incredible opportunity from a work perspective. Whilst at Weil, we represented the American International Group (AIG). They were seeking assistance from the government and I had the opportunity to work and negotiate with the Federal Reserve Bank which was an incredible experience and really cutting edge.
I then returned to Australia, moving back to Sydney where I worked at JP Morgan and became an in-house counsel for their investment banking operations. As an executive director/assistant general counsel, I advised the bank’s mergers and acquisitions, equities, capital markets and research teams. It was an interesting and rewarding first experience as an in-house lawyer. I’ve since moved back to Melbourne and have returned to private practice, where I am today!
What do you enjoy about transactional law and was there a particular experience working with a client you enjoyed?
Being able to work with senior management is something I really enjoy about working as a mergers and acquisitions lawyer. As a transactional lawyer, you’re able to embed yourself in the business and learn about the business. And that’s how you facilitate the transaction – by understanding the business’ risks, what is important to them and what they want to achieve in the deal. I enjoy getting to learn about how businesses run, how they function and how solving their issues will improve their profitability. I enjoy the strategic part of transactional law.
What you realise when you work at a law firm is that businesses come to you for specialist advice in connection with complex transactions. As a transactional lawyer, you’re helping businesses execute a complex transaction and I feel quite satisfied being able to help clients do that, it’s a fantastic feeling. Looking back, for example, when I was in America working for AIG, there was a debate as to whether companies were too big to fail and whether the American government would help them. I helped prepare a presentation for the client as to what would occur at a US economic level if the government let AIG declare bankruptcy. As part of a team of lawyers, we assisted AIG execute a debt for equity swap where the government invested in AIG. Knowing what I was doing was important to the American economy and to the livelihood of many Americans was a phenomenal experience. Being a lawyer, you try to get as much exposure to different environments as possible. I feel really lucky to be where I was and fortunate to have had the experience I had.
“As a transactional lawyer, you’re helping businesses execute a complex transaction and I feel quite satisfied being able to help clients do that, it’s a fantastic feeling.
Looking at the Covid-19 pandemic now, many companies are executing transactions critical to the Australian economy. A transactional lawyer could be assisting in capital raising to help businesses protect themselves from what could be a rocky period in the economy. Being able to participate in current events and issues makes corporate work interesting and dynamic.
What skill sets do you think students should acquire to help them enter the transactions / mergers and acquisitions legal field?
In terms of studies, it helps to have a financial background and financial skills. Degrees such as engineering and science are also helpful. From an analytical perspective, it’s helpful to study something that facilitates the development of specialist skills as commercial law and drafting agreements, for example, are very technical.
It’s also important to be a quick thinker. You have to enjoy the negotiation aspects of transactions and as well as working in a team as working in corporate law is very collaborative. You will always be working in teams, and coordinating with a lot of different groups. The teams can sometimes be quite large for complex transactions.
Showing a real interest in business, commerce and transactional work is also important. Try to learn as much about mergers and acquisitions as you can. A few ways you can go about this include going to a law firm’s website, doing a virtual internship (for example, Inside Sherpa) and reading the Australian Financial Review as often as you can. The AFR will report on and analyse transactions businesses are currently engaging in - it’s the best place to learn about what happens in the corporate mergers and acquisitions world.
Do you have any advice as to the sort of work experience and opportunities students should take on to help them enter the transactions/mergers and acquisitions legal field?
Clerkship opportunities, as well as experience in accounting or investment banking firms, will give students a good introduction to mergers & acquisitions. Graduates who are entrepreneurial, commercially minded and interested in developing their own business ideas may choose to take that path before seeking to apply for clerkships. Any opportunity to apply the skills that you have acquired whilst studying at university is helpful.
Getting a job as a paralegal or research assistant or similar role at a commercial law firm is also a fantastic opportunity to see the inner workings of a law firm. It gives students an opportunity to work with a potential employer and also gives them an opportunity to see if that’s the kind of work they’re interested in. There are some students who know what they want to do, some students might be a bit unsure and conflicted and also be interested in other areas of law. As long as you’re pursuing worthwhile opportunities, it will take you somewhere positive.
Do you have any last encouraging words for students?
There’s no formula to an ideal candidate who will be hired. Amongst other things, law firms are looking for people who are confident, resourceful and personable and who are interested in the areas of law that is being practised at the relevant firm. If you present yourself in a way that shows you can interact with experienced lawyers and experienced business people that’s a great start
“Amongst other things, law firms are looking for people who are confident, resourceful and personable and who are interested in the areas of law that is being practised at the relevant firm.
SUGGESTED ELECTIVES/ACTIVITIES:
Electives:
Competition and Consumer Law (LAW4702)
Taxation law (LAW4704)
Australian Commercial Law (LAW4198)
Private Investment Law (LAW4671)
Experience/Activities:
Participating in the LSS Deals Competition and ABL-Monash Takeovers Competition. These competitions require participants to advise a hypothetical client on how to acquire and take total or effective control of a target company.
Seminars run by Monash on topics relating to corporations law.
Applying to be an Intern at ACCC as a final-year student.
IN THE NEWS
$16.5BN MERGER OF TPG AND VODAFONE COMPLETE, THE CULMINATION OF 2 YEARS’ EFFORT (LAWYERS WEEKLY, 2020)
Tony Zhang writes on the largest Australian M&A transaction in 2020.
“The new entity now under TPG Telecom Limited was known to be the largest M&A transaction to complete in 2020 and one of the largest ever in the Australian telecommunications industry.
The implementation of the merger represents the final step in a marathon process since TPG and VHA agreed, two years ago, to merge and challenge Telstra and Optus’ dominance in the telco market in Australia.”
M&A DEALS IN THE TIME OF THE CORONAVIRUS (LAWYERS WEEKLY, 2020)
Naomi Neilson writes on the effect of Covid-19 on M&A transactions.
“In terms of private market space, Corrs predicted withdrawals from deals, but bold buyers may find opportunities. For deals which don’t fall over, the firm expects to see an increase in deferred consideration structures to “bridge valuation gaps” between all parties.”
TAKEOVERS (ABC)
All ABC articles relating to the topic of ‘takeovers’.
LEARN MORE ABOUT MERGERS AND ACQUISITIONS
MERGER GUIDELINES (Accc, 2008)
An outline of the the analytical and evaluative framework applied by the ACCC when reviewing mergers under the Competition and Consumer Act 2010.
FROM FOSTER’S TO WESTFIELD - AUSTRALIA’S BIGGEST TAKEOVERS (WESTPAC, 2017)
Michael Bennet writes on Australia’s biggest takeovers up to the year of 2017.
M&A LEADERSHIP SERIES: THE OUTLOOK IN AUSTRALIA (DELOITTE, 2019)
Insights and advice on the future of M&A.