Let's Talk Capital Markets

[JHP]

I'm in big law, making a foray into capital markets work (not technically slotted into that group yet--still straddling doing M&A work with other ongoing public company stuff plus whatever capital markets stuff comes up for clients).

I'm interested in securities work generally, and am finding the capital markets to be more or less interesting, but haven't done enough to really get a sense of why people choose the work, up/downsides of that kind of work, how it sets folks up for potential exit options if they should so choose, the general health of cap markets groups and whether cap markets work is especially sensitive to market fluctuations (I would assume it is very sensitive to market dips).

Could folks share insights on the above points, as well as any relevant observations about cap markets work in your region, LA, NYC and Boston in particular?

TIA!

[TUwave]

Also interested as I'm a junior corporate "generalist" in a large east coast city (not NYC) but have been about a 50/50 split between M&A and Capital Markets (which would still include a little M&A and ongoing public work.) I'll have to choose a group shortly and any of the requested info would be helpful.

[JHP]

Bumping/reviving this thread. Hoping some folks can chime in now that some of the OCI forums have quieted down.

[Blessedassurance]

What do you want to know specifically about securities/capital markets work?

[Anonymous User]

What do you want to know specifically about securities/capital markets work?

I'm about to start as a 1st year in the cap markets group at my firm. I was hired during 3L so i'm nervous about the kind of work i'll be doing. Can you talk a little about what work you did as a 1st year and up?

[Anonymous User]

Capital markets work at biglaw comes in many different flavors/permutations. All the big firms pretty much do everything: equity, debt, convertible debt, etc., representing both issuers and underwriters depending on the deal. But most firms will also generally have a focus.

[Anonymous User]

What do you want to know specifically about securities/capital markets work?

I'm about to start as a 1st year in the cap markets group at my firm. I was hired during 3L so i'm nervous about the kind of work i'll be doing. Can you talk a little about what work you did as a 1st year and up?

Will you be in a pure capital markets group or a securities/capital markets group?

As a junior, pure capital markets work involves a lot of due diligence and grunt work.

For due diligence, you do the general due diligence, and then you take the disclosure document (e.g., S-1, S-3 etc.) and “circle up” factual statements and then find “back up” for the factual statement (i.e., you find evidence to support the statement). There’s also the auditor comfort mentioned in the prior comment.

Harder part of this is omissions, which is a major part of the general due diligence (here, you’re trying to find what should be disclosed and wasn’t). Entire point of the due diligence is for purposes of a 10b-5 letter/negative assurance opinion.

You also get to do other things depending on the firm/how good you are/the partner etc. For example, you could start reviewing underwriting agreements as a second year or you could be start doing it as a fifth year. In my experience, the smaller the firm, the earlier you get to do substantive stuff, but others may disagree.

If you’re in a securities/capital markets group, you’ll also do other things, mostly public company reporting (drafting a public company’s 8-K, helping review 10-Qs, 10-Ks, proxy/information statements, handling basic Section 16 issues, drafting legend removal opinions and so on).

Hard to tell you exactly what your experience would be like as it largely depends on your firm (worked with some firms that had the same associates doing the same due diligence stuff year in and year out, and also worked with firms where the third year was drafting the S-1 for the IPO, albeit for a small company).

After about your third year (or maybe later, depending on your firm), the work gets more interesting.

As a junior you’ll also be doing “form checks,” as mentioned, which involves taking the document (e.g., a registration statement), and reviewing it against the applicable SEC Form (e.g., a Form S-1, S-3 etc.) to make sure everything that’s required to be there is there. In the course of doing that you’ll also review what others/similar companies did, as well as other resources (such as practical law).

As you get more senior it gets more exciting (to the extent that any of this can be exciting). It’s not true that it’s largely copy and paste. Certain things are. Example, the underwriters will usually have a standard underwriting agreement, the bulk of which won’t change from deal to deal for companies in x industry. But even then there’s room for negotiation of certain things.

In sum, securities/capital markets can be exciting depending on the firm, although the first year can be tedious. It gets better.

Typing on phone so excuse typos.

[Anonymous User]

Both descriptions above are pretty spot on. As a second year I started drafting underwriting/purchase agreements, pricing supplements and indentures already. At my firm, first years will draft all the ancillary certificates/closing documents too, along with being the person coordinating with specialists for comments and turning the pro supp / OM. On deals now, as a rising third year, I'll pretty much handle the closing process too. Seniors/partners will generally negotiate the DoN and will provide their comments to the OM (and will review drafts everything I put together).

[Anonymous User]

Finishing up as a first year doing mostly Capital Markets work. I have already drafted a number of Purchase Agreements/Underwriting Agreements, Indentures/Supp Indentures, and Pricing Supplements/Pricing Term Sheets. I also draft all of the ancillary documents and opinion letters. Agree with the above regarding backup and comfort circles. I've done around 15 bond deals (mix of HY and IG) and a few equity deals (Registered Direct Offerings and At The Market transactions) but no IPOs yet. I have also handled the closing process, including DTC calls.

All this is to say that it is very firm dependent on what tasks a junior can do.

[Blessedassurance]

What do you want to know specifically about securities/capital markets work?

I'm about to start as a 1st year in the cap markets group at my firm. I was hired during 3L so i'm nervous about the kind of work i'll be doing. Can you talk a little about what work you did as a 1st year and up?

Will you be in a pure capital markets group or a securities/capital markets group?

As a junior, pure capital markets work involves a lot of due diligence and grunt work.

For due diligence, you do the general due diligence, and then you take the disclosure document (e.g., S-1, S-3 etc.) and “circle up” factual statements and then find “back up” for the factual statement (i.e., you find evidence to support the statement). There’s also the auditor comfort mentioned in the prior comment.

Harder part of this is omissions, which is a major part of the general due diligence (here, you’re trying to find what should be disclosed and wasn’t). Entire point of the due diligence is for purposes of a 10b-5 letter/negative assurance opinion.

You also get to do other things depending on the firm/how good you are/the partner etc. For example, you could start reviewing underwriting agreements as a second year or you could be start doing it as a fifth year. In my experience, the smaller the firm, the earlier you get to do substantive stuff, but others may disagree.

If you’re in a securities/capital markets group, you’ll also do other things, mostly public company reporting (drafting a public company’s 8-K, helping review 10-Qs, 10-Ks, proxy/information statements, handling basic Section 16 issues, drafting legend removal opinions and so on).

Hard to tell you exactly what your experience would be like as it largely depends on your firm (worked with some firms that had the same associates doing the same due diligence stuff year in and year out, and also worked with firms where the third year was drafting the S-1 for the IPO, albeit for a small company).

After about your third year (or maybe later, depending on your firm), the work gets more interesting.

As a junior you’ll also be doing “form checks,” as mentioned, which involves taking the document (e.g., a registration statement), and reviewing it against the applicable SEC Form (e.g., a Form S-1, S-3 etc.) to make sure everything that’s required to be there is there. In the course of doing that you’ll also review what others/similar companies did, as well as other resources (such as practical law).

As you get more senior it gets more exciting (to the extent that any of this can be exciting). It’s not true that it’s largely copy and paste. Certain things are. Example, the underwriters will usually have a standard underwriting agreement, the bulk of which won’t change from deal to deal for companies in x industry. But even then there’s room for negotiation of certain things.

In sum, securities/capital markets can be exciting depending on the firm, although the first year can be tedious. It gets better.

Typing on phone so excuse typos.

The above is me, by the way. Didn't mean to post anonymously.