Mergers and acquisitions are significant aspects when it comes to enhancing the growth of businesses. Under this, two or more companies enter into a process of consolidation or merger or one of them takes complete control over the other, which is referred to as the acquisition. Several big companies are created out of these deals.
However, some companies may be compelled to enter into the deal and merge under the pressure of severe competition. The mergers and acquisitions lawyers play a vital role in the deals taking place around the globe. Right from simple deals of acquisitions to the ones that are complex in nature, the scenario is going to differ, and the lawyers have to navigate a host of issues such as negotiation with the regulatory bodies to ensure the interest of both parties involved in the deal.
Functions of M&A lawyers
The deals are usually complex whether viewed from the perspective of legal expertise or procedure. Due to the winding nature of these deals, the mergers and acquisitions law firms need to draft the agreement carefully and negotiate it fully keeping in mind the concerns of both parties, and the proficiency of the legal practitioners is important to make the deal successful. Contrary to the civil or criminal lawyer where the professional requires to have knowledge in a single stream, the lawyers involved in M&A deals must have a deeper understanding of the law and know the technical aspects of different fields of law and business.
A majority of the work in this field may not be related to the things included in the statute books. For instance, the work may include carrying out extensive due diligence of big organizations that may have entered into multitudes of contracts with a huge base of vendors and need to comply with several statutes and regulations. They also need to ensure if the company that needs to acquire another company may bring some risks and liabilities.
Things to know
Due to high stakes in the M&A deals, the legal practitioners have an important role to play in the transactions and the corporate entities never compromise while choosing the best class of legal professionals to make the deal successful.
Due to the technological advancements going through the world, the businesses are a part of the new era, and quite naturally the contracts of mergers and acquisitions must be crafted with details to avoid discrepancies in future and to make the process free from hassles.
Due to extensive hard work required in the process of acquiring new companies, the lawyers working in this field are highly paid or the pay is commensurate with the deals.
For the larger deals, a team of about thousand legal practitioners may need to work together and for the smaller deals, a group of three to four lawyers may need to offer service. Basically, the mergers and acquisitions lawyers are the backbone of the parties involved in the deal and serve as their advisors. Moreover, they also serve as the points of coordination with the rest of the members of the team and help the transaction to close successfully.
Pricing models of the lawyers
According to research, the following are some of the specimens of price models of the M&A lawyers.
- A percentage of the value of the deal.
- Fees to be given on an hourly basis although the rate per hour is fixed
- Flat fee
- Hourly fee along with a cap
Factors determining the prices
Some of the factors that determine the prices of the M&A law firms are.
- The value or the stake of the deal of merger and acquisition.
- The time spent by the lawyers for drafting the negotiations and the legal opinions.
- The sector or market to which the companies belong.
- Seeking regulatory permissions
- Minimum fees for the advisory services
- The nature of the due diligence process which could be entirely different for a software company or a chain of restaurants.
Although this is what the firms earn during the transactions, there are smaller law firms that are hired during these deals along with the top firms due to the rise in the number of deals in the startup sectors as well as the SMEs. The smaller firms earn less as the size of the deals and the stakes are lower. However, it is difficult for the deals to close with a single lawyer as the volume of work is usually very high and even the smallest firm handling the work of M&A employ about five to ten lawyers.
Earnings of the people working in the M&A law firms
The legal practitioners working on the deals need to work very hard and a lawyer may have to spend about twelve to fourteen hours in the office during the proceedings of the deals. Often the lawyers get time to take short naps of about three to four hours and need to return to the office at the usual time. Sometimes, the lawyers need to pour over the documents of transaction and may not get the opportunity to go home at all. So you might think that the reward for such mergers and acquisitions in India must be very high. The salaries usually diverge depending on the success that the lawyers build while working as a junior associate. Furthermore, a lot depends on the share they bring to the revenue of the firm.