Difference in exit options for public company M&A vs. private equity? Forum

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Mr. Kister

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Difference in exit options for public company M&A vs. private equity?

Post by Mr. Kister » Thu Mar 11, 2021 6:32 pm

Are there differences?

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 12:46 pm

I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 1:13 pm

Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
I thought the essential skillsets for public M&A attorney are PE M&A+securities reg skillset, so Public M&A lawyers should be able to master PE M&A deals pretty soon as well? (since the skills are transferrable)

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 2:08 pm

Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
Really? Not sure why you think PE "by a mile." In terms of quality of exit options, I'd say they're equivalent. The types of clients you typically interface with will be different (as well as certain transaction terms like reps/warranties), but the hard skills required for both overlap like 90%. If you're trying to go work for KKR, then obviously it'll help to do PE work. But I'd say working for Disney/Amazon/J&J isn't necessarily < working for KKR/TPG/Vista

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 2:55 pm

Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places

Disagree with this. Certainly with the "by a mile" part. PE M&A puts you into a box compared to public M&A. The basic M&A stuff is the same for both but if you want to go to a generic F500 inhouse role (or maybe have a shot at GC) the securities reg and governance stuff that you need for public M&A is pretty helpful / important. Also helpful if you want to go to a late stage start-up type company where you're looking at a near-intermediate term exit (either an IPO or sale to a likely public company). Quality in house roles at PE firms are much rarer (most firms will have a general counsel and occasionally one or two minions to handle NDAs and other random things that pop up) and can be challenging from a WLB standpoint.

The advantage with PE is that you get a lot more reps and get more responsibility early on given relatively smaller and simpler deals. It's not uncommon for a mid/senior PE associate to be "running" deals while you almost never see that in big ticket public M&A. The flip side of this is that PE deals are a little more "templatized" than public M&A deals so your value add is more about knowing what's market vs. more interesting work. PE firms are also weird to work for in that they're highly demanding and tend to micromanage. I tend to disagree with the notion that corporate attorneys are "scribes" but this PE M&A feels close at times.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 4:09 pm

Anonymous User wrote:
Fri Mar 12, 2021 1:13 pm
Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
I thought the essential skillsets for public M&A attorney are PE M&A+securities reg skillset, so Public M&A lawyers should be able to master PE M&A deals pretty soon as well? (since the skills are transferrable)
This is extremely untrue. It's basically the opposite.

As to exit options, sec reg knowledge is the most important for either a big strategic or a late-stage VC -- you can acquire in either sophisticated PE or generally in pub M&A but more consistently will acquire in pub M&A. Aside from that, quality of options is generally going to be the same, just depends on what you want.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by lolwutpar » Fri Mar 12, 2021 4:15 pm

I do both and I think the differences described ITT are overblown. The differences are (1) the securities stuff already discussed and (2) the ability to structure the deals to be a bit more funky in PE deals.

I don't think exit ops are substantially different unless you want to do M&A in house at a PE shop. But not sure why you would...seems like similar hours for less pay to me.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 5:05 pm

Anonymous User wrote:
Fri Mar 12, 2021 2:08 pm
Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
Really? Not sure why you think PE "by a mile." In terms of quality of exit options, I'd say they're equivalent. The types of clients you typically interface with will be different (as well as certain transaction terms like reps/warranties), but the hard skills required for both overlap like 90%. If you're trying to go work for KKR, then obviously it'll help to do PE work. But I'd say working for Disney/Amazon/J&J isn't necessarily < working for KKR/TPG/Vista
So I don’t think the skill sets are that similar at all. Public M&A is largely: (1) investor disclosure, (2) sale process and fiduciary duties, (3) closing conditions and (4) the interim no-shop periods and exclusions.

PE M&A is much more focused on indemnities (although much less so in the last few years), purchase price adjustments, debt financing provisions and closing certainty - and there is a lot more customizable closing conditions and the like that you’ll see in private deals. If it’s not a pure walk away deal, you negotiate directly with seller investors on many contractual points (non-competes and solicits, releases, indemnity backstops). Additionally, PE has added complexities of rollovers, requiring being able to negotiate operating agreements with minority investors, preferred stock/equity terms, etc. Then not all PE deals are 90% ownership deals, so PE sees more minority financing deals, which may include provisions such as capital calls, defaults, RoFR/co-sale, drags, etc. Also, in general, PE is going to have much more complex capital structures for management and employees.

I’d buy that a KKR take private deal is very similar to public M&A, but Vista buying a Andreessen backed portco with a management roll is not even in the ballpark or public M&A.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 5:38 pm

Anonymous User wrote:
Fri Mar 12, 2021 5:05 pm
Anonymous User wrote:
Fri Mar 12, 2021 2:08 pm
Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
Really? Not sure why you think PE "by a mile." In terms of quality of exit options, I'd say they're equivalent. The types of clients you typically interface with will be different (as well as certain transaction terms like reps/warranties), but the hard skills required for both overlap like 90%. If you're trying to go work for KKR, then obviously it'll help to do PE work. But I'd say working for Disney/Amazon/J&J isn't necessarily < working for KKR/TPG/Vista
So I don’t think the skill sets are that similar at all. Public M&A is largely: (1) investor disclosure, (2) sale process and fiduciary duties, (3) closing conditions and (4) the interim no-shop periods and exclusions.

PE M&A is much more focused on indemnities (although much less so in the last few years), purchase price adjustments, debt financing provisions and closing certainty - and there is a lot more customizable closing conditions and the like that you’ll see in private deals. If it’s not a pure walk away deal, you negotiate directly with seller investors on many contractual points (non-competes and solicits, releases, indemnity backstops). Additionally, PE has added complexities of rollovers, requiring being able to negotiate operating agreements with minority investors, preferred stock/equity terms, etc. Then not all PE deals are 90% ownership deals, so PE sees more minority financing deals, which may include provisions such as capital calls, defaults, RoFR/co-sale, drags, etc. Also, in general, PE is going to have much more complex capital structures for management and employees.

I’d buy that a KKR take private deal is very similar to public M&A, but Vista buying a Andreessen backed portco with a management roll is not even in the ballpark or public M&A.
this is helpful. thanks!

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri Mar 12, 2021 7:32 pm

Anonymous User wrote:
Fri Mar 12, 2021 4:09 pm
Anonymous User wrote:
Fri Mar 12, 2021 1:13 pm
Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
I thought the essential skillsets for public M&A attorney are PE M&A+securities reg skillset, so Public M&A lawyers should be able to master PE M&A deals pretty soon as well? (since the skills are transferrable)
This is extremely untrue. It's basically the opposite.

As to exit options, sec reg knowledge is the most important for either a big strategic or a late-stage VC -- you can acquire in either sophisticated PE or generally in pub M&A but more consistently will acquire in pub M&A. Aside from that, quality of options is generally going to be the same, just depends on what you want.
Original anon. Seconding this. I’ve seen some V5 M&A attorneys who are probably go to attorneys at their firm on a $50B public co merger, but just completely butchered an indemnity in a $750M private deal. Spent weeks arguing that the escrow would not be the sole remedy and then forgot to get any agreement with our stockholders to be able to assert a claim against them, which any half decent PE associate knows doesn’t work.

Mr. Kister

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Mr. Kister » Fri Mar 12, 2021 8:44 pm

Anonymous User wrote:
Fri Mar 12, 2021 5:05 pm
Anonymous User wrote:
Fri Mar 12, 2021 2:08 pm
Anonymous User wrote:
Fri Mar 12, 2021 12:46 pm
I’m guessing private equity by a mile. Public M&A pretty much makes you good at public M&A. Maybe pretty good carryover to be a securities lawyer in house due to the disclosure side of it.

Private equity I could see leading to: in-house at VC or PE funds (especially if you can learn the regulatory side of in house), private company general counsel, M&A attorney at public companies, etc. I think skills just lend out a lot more places
Really? Not sure why you think PE "by a mile." In terms of quality of exit options, I'd say they're equivalent. The types of clients you typically interface with will be different (as well as certain transaction terms like reps/warranties), but the hard skills required for both overlap like 90%. If you're trying to go work for KKR, then obviously it'll help to do PE work. But I'd say working for Disney/Amazon/J&J isn't necessarily < working for KKR/TPG/Vista
So I don’t think the skill sets are that similar at all. Public M&A is largely: (1) investor disclosure, (2) sale process and fiduciary duties, (3) closing conditions and (4) the interim no-shop periods and exclusions.

PE M&A is much more focused on indemnities (although much less so in the last few years), purchase price adjustments, debt financing provisions and closing certainty - and there is a lot more customizable closing conditions and the like that you’ll see in private deals. If it’s not a pure walk away deal, you negotiate directly with seller investors on many contractual points (non-competes and solicits, releases, indemnity backstops). Additionally, PE has added complexities of rollovers, requiring being able to negotiate operating agreements with minority investors, preferred stock/equity terms, etc. Then not all PE deals are 90% ownership deals, so PE sees more minority financing deals, which may include provisions such as capital calls, defaults, RoFR/co-sale, drags, etc. Also, in general, PE is going to have much more complex capital structures for management and employees.

I’d buy that a KKR take private deal is very similar to public M&A, but Vista buying a Andreessen backed portco with a management roll is not even in the ballpark or public M&A.
Well, believe it or not you just changed the course of my career. Thank you for your impact on the rest of my life.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Sat Mar 13, 2021 3:09 pm

lolwutpar wrote:
Fri Mar 12, 2021 4:15 pm
I do both and I think the differences described ITT are overblown. The differences are (1) the securities stuff already discussed and (2) the ability to structure the deals to be a bit more funky in PE deals.

I don't think exit ops are substantially different unless you want to do M&A in house at a PE shop. But not sure why you would...seems like similar hours for less pay to me.
Until you get carry at which point your comp can vastly outstrip inhouse at a pubco depending on the PE shop's performance.

In-house at a PE shop (at least a name brand shop with a >$1b fund) is kind of a unicorn role, though. Outside of a KKR, blackstone, vista or any other $50-70b+ AUM shop, most shops only need so many lawyers.

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Sat May 07, 2022 7:48 pm

Bump - anyone know if in-house lawyers at PE shops can get carry?

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Re: Difference in exit options for public company M&A vs. private equity?

Post by LittleRedCorvette » Sun May 08, 2022 1:10 pm

TBH I don't see why anyone would want to be in-house doing M&A at a PE shop absent a significant carry/financial upside. I find PE clients and PE deals to be completely insufferable.

I think "PE M&A" is probably more broadly marketable, since it covers a lot of things that are relevant to all types of M&A for all types of clients (particularly smaller ones), not just "dickhead PE portco deal #44."

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Sun May 08, 2022 3:47 pm

Increasingly PE firms do hire deal lawyers who actively help throughout a transaction. Sometimes it’s just a legal job and sometimes it’s sort of a hybrid legal/financial role.

These people aren’t exactly PE deal team but do tend to have senior titles and be highly compensated. They are eligible for carry in many cases. I work on private deals with this dynamic all the time now. These roles are for biglaw partners or very good biglaw associates, not for your average associate

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Re: Difference in exit options for public company M&A vs. private equity?

Post by Anonymous User » Fri May 13, 2022 7:54 pm

Agree with the above that PE merger agreements for even the smallest, shittiest deals can be way, way more complicated than $10B+ public-public. same with diligence.

Also agree that if you spend 5 years doing PE M&A and have no background in securities law + corporate governance, you've missed a pretty substantial part of what (some) pubco AGCs do.

the exposure M&A associates seems to vary a great deal from firm to firm - e.g., I started marking up S-4s etc my first few months in, but it seems like, from working w/them, DPW M&A associates punt a good portion of that workstream to a cap markets group? (feel free to correct me DPW lurkers)

frankly I'd love to do that - I don't think it's "fun." but knowing the basics of the 33/34 act pretty important part of a corporate lawyer's toolkit imo

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