M&A vs Capital Markets Forum

[jjcheng]

After taking a look at http://www.chambers-associate.com/Artic ... aSummaries, can anyone provide any further insight into the day to day differences in these two practice areas?

Are they pretty much interchangeable when speaking of/working in "Corporate" practice?

Thanks!

[jjcheng]

After taking a look at http://www.chambers-associate.com/Artic ... aSummaries, can anyone provide any further insight into the day to day differences in these two practice areas?

Are they pretty much interchangeable when speaking of/working in "Corporate" practice?

Thanks!

"these two practice areas" = M&A and capital markets

[quakeroats]

After taking a look at http://www.chambers-associate.com/Artic ... aSummaries, can anyone provide any further insight into the day to day differences in these two practice areas?

Are they pretty much interchangeable when speaking of/working in "Corporate" practice?

Thanks!

They're not interchangeable at all. One deals with a method of financing (often debt or equity). The other involves the buying or selling assets and whole companies or forming joint ventures between companies. They're both on the corporate side of things, but the work is very different.

[imchuckbass58]

They are very different. Here are some differences I have noticed (not all necessarily relevant to the work you will do as a junior associate):

(1) M&A work tends to be much more strategic/customized, whereas in cap markets you're really just churning out the same deal over and over (with minor differences). In M&A, you're worried about issues like how to protect your deal from other bidders, or how to reduce the ability of the target to resist your offer and force you to pay a higher price (and vice versa if you are the target). While not all the time, you will come up with novel transaction structures/terms relatively often to deal with issues unique to the deal. With cap markets, by contrast the same deal has more or less been done 100 times before and it's just a matter of getting the disclosures right. There's much less strategic negotiation, and much less customization of deal structure/terms.

(2) M&A tends to involve issues from lots of other areas of law - tax, environmental, antitrust, differences between US and foreign law, etc. While you won't be in charge of these issues (lawyers who practice in those areas will), you get exposure to it and have to integrate those concerns into your work. So some would say you get broader exposure to different issues. Cap markets is much more focused on getting really good at one area of law.

(3) While both have this to some degree, cap markets is arguably much more of a "process." i.e., a lot of your time is spent coordinating with the underwriters, people at the company, potential investors, etc. If you like the interactive aspect, this can be a plus, but some people view it as herding cats.

(4) Generally speaking, you'll get more responsibility faster in cap markets compared to M&A. Some would argue, however, that most cap markets transactions (especially debt) are less "important" compared to M&A.

(5) Your exit options from M&A practice will generally be broader than from cap markets practice. Note this doesn't necessarily mean better. Cap markets best prepares you to go in-house at a bank, where you will do very similar work to what you did at a firm (this isn't necessarily bad - it's well compensated, and some would say more exciting). Companies have very few if any cap markets lawyers. If you do M&A, it often prepares you for a broader range of "general" in-house jobs. This isn't a hard and fast rule, of course.

[alabamabound]

Amongst all the "they're very different" talk in here (which is correct), it probably should be pointed out that many corporate attorneys do both types of work early in the career before developing a specialization.

[Bronte]

After taking sec reg, I plan to run for dear life if I ever hear anyone at my firm say "capital markets." I hope for the sake of everyone involved with that practice area that real practice has little to do with what one studies in that course.

[jjcheng]

They are very different. Here are some differences I have noticed (not all necessarily relevant to the work you will do as a junior associate):

(1) M&A work tends to be much more strategic/customized, whereas in cap markets you're really just churning out the same deal over and over (with minor differences). In M&A, you're worried about issues like how to protect your deal from other bidders, or how to reduce the ability of the target to resist your offer and force you to pay a higher price (and vice versa if you are the target). While not all the time, you will come up with novel transaction structures/terms relatively often to deal with issues unique to the deal. With cap markets, by contrast the same deal has more or less been done 100 times before and it's just a matter of getting the disclosures right. There's much less strategic negotiation, and much less customization of deal structure/terms.

(2) M&A tends to involve issues from lots of other areas of law - tax, environmental, antitrust, differences between US and foreign law, etc. While you won't be in charge of these issues (lawyers who practice in those areas will), you get exposure to it and have to integrate those concerns into your work. So some would say you get broader exposure to different issues. Cap markets is much more focused on getting really good at one area of law.

(3) While both have this to some degree, cap markets is arguably much more of a "process." i.e., a lot of your time is spent coordinating with the underwriters, people at the company, potential investors, etc. If you like the interactive aspect, this can be a plus, but some people view it as herding cats.

(4) Generally speaking, you'll get more responsibility faster in cap markets compared to M&A. Some would argue, however, that most cap markets transactions (especially debt) are less "important" compared to M&A.

(5) Your exit options from M&A practice will generally be broader than from cap markets practice. Note this doesn't necessarily mean better. Cap markets best prepares you to go in-house at a bank, where you will do very similar work to what you did at a firm (this isn't necessarily bad - it's well compensated, and some would say more exciting). Companies have very few if any cap markets lawyers. If you do M&A, it often prepares you for a broader range of "general" in-house jobs. This isn't a hard and fast rule, of course.

Sounds like you have some first-hand experience. Thanks a lot for the replies, quite useful. A few more questions if you don't mind:

1. Would you say that M&A draws a certain kind of person/lawyer vs. capital markets work?

2. It sounds like you get to be more creative in M&A work, is that a fair statement?

3. Does any corporate work require persuasive writing at all (like litigation-esque documents) or are all the documents on the corporate side rather cut-and-dry?

Thanks!

[ajaxconstructions]

Of interest.

[imchuckbass58]

Sounds like you have some first-hand experience. Thanks a lot for the replies, quite useful. A few more questions if you don't mind:

1. Would you say that M&A draws a certain kind of person/lawyer vs. capital markets work?

2. It sounds like you get to be more creative in M&A work, is that a fair statement?

3. Does any corporate work require persuasive writing at all (like litigation-esque documents) or are all the documents on the corporate side rather cut-and-dry?

Thanks!

I have first-hand experience in the sense on having worked on these things as a summer (last year), but I'm sure there are other people much more knowledgeable than I who should jump in. That said, my best answer:

(1) Not really that different. It will depend on the firm and the "culture" of the particular practice areas. I guess generally M&A lawyers are more type A and cap markets lawyers are more detail-oriented, but the differences are minor and probably overwhelmed by the quirks of different practice groups within firms.

(2) You definitely get to be more creative in terms of deal structuring (few deals are exactly the same), but there's some creativity in cap markets also (well, but lawyer standards). For instance, for an IPO prospectus, you'll have to work with the company and bankers to decide how you're going to tell the company's story in the most positive light possible without overstating things/running afoul of rules. But that's different creativity - wordplay versus coming up with creative structures.

(3) Persuasive writing? Not that I can think of, but I may be wrong. Bankruptcy work often goes to court and become a quasi-litigation. You'll write memos, but they're usually for internal consumption and are meant to be precise rather than persuade. I can't think of anything else.

[Wholigan]

I would add that within capital markets and M&A, who your firm represents will make a difference too. Some firms represent both sides, so as an associate, you will be on both sides of deals at various times, but some firms tend to specialize.

If you represent underwriters in cap markets it would be different from representing issuers. Underwriters (IBanks) do debt/equity offerings all the time and they will know exactly what they want you to do and there won't be much hand holding or advising. On the other hand, if you represent issuers who might do a cap markets offering once in a while, it's a different kind of relationship with the client. Although as was mentioned, cap markets is a little more cut and dried than M&A.

In M&A, same thing with whether you are doing PE M&A or Public M&A. If the former, your clients are sophisticated PE firms, while in the latter, you're working for a company that is likely not M&A savvy, who is looking at the deal from a strategic angle, not an investment angle. I think this is a more important distinction than above. It can also have an impact on lifestyle/ predictability of hours, which M&A is probably sligtly worse for.

[jjcheng]

Thanks for the responses.

1. Could someone elaborate on the lifestyle/predictability of hours of PE vs Public M&A? How do both compare to capital markets work?

2. Also, what is the distinction between "banking and finance", as defined by Chambers, versus "Capital markets" which fell under "Corporate"?

3.Under the "banking and finance" page, it's been said that banking and finance lawyers (securities lawyers?) are responsible for finding "“Creating innovative ways to deliver legal advice so clients can comply with financial regulatory reform". Is that only true for top-notch lawyers/firms or can that be generally said for the "banking and finance" practice?

[Wholigan]

Disclosure: I'm just a SA. For yout first question, I've been told that PE M&A can be more demanding than public because. PE firms often are in a hurry to close a deal and since they do these all the time, they know exactly how fast a law firm can close a deal with the pedal to the metal and will expect the firm to put said pedal to the metal, which could mean associates work all weekend, etc.

For banking/finance vs. capital markets, what I understand from what I've worked on is that banking is mostly when a commercial bank lends a company money (UCC/ secured transactions are most important since these are not registered with the SEC). On the other hand, capital markets involves raising money by selling bonds or stock to investors (more Sec reg heavy). Hope this helps.

Thanks for the responses.

1. Could someone elaborate on the lifestyle/predictability of hours of PE vs Public M&A? How do both compare to capital markets work?

2. Also, what is the distinction between "banking and finance", as defined by Chambers, versus "Capital markets" which fell under "Corporate"?

3.Under the "banking and finance" page, it's been said that banking and finance lawyers (securities lawyers?) are responsible for finding "“Creating innovative ways to deliver legal advice so clients can comply with financial regulatory reform". Is that only true for top-notch lawyers/firms or can that be generally said for the "banking and finance" practice?

[imchuckbass58]

Disclosure: I'm just a SA. For yout first question, I've been told that PE M&A can be more demanding than public because. PE firms often are in a hurry to close a deal and since they do these all the time, they know exactly how fast a law firm can close a deal with the pedal to the metal and will expect the firm to put said pedal to the metal, which could mean associates work all weekend, etc.

This sounds about right. You also have competitive bid situations much more often in PE M&A so that adds to the pressure to close quickly. They're generally more fast-paced.

That said, the fact that PE firms do these deals all the time means they also run more smoothly in the sense that you're less likely to have the client do something dumb and have to fix it at the last minute, or get an out-of-the-blue request because the client didn't realize they needed something. There's also a lot less handholding in terms of process, etc.