M&A in the Middle Market

Doing M&A in the middle market: Jenner & Block’s perspective

Jenner & BlockA strong transactional practice group can assist clients in a wide variety of complex transactions. For example, Jenner & Block LLP assists clients in areas including mergers and acquisitions, corporate finance, securities, and private equity and investment management. A broad understanding of companies and the markets is key to helping clients decide how to structure transactions to attain the most desired outcome.

Business Climate 

In 2015, improved economic conditions resulted in record-setting M&A activity, both in terms of deal volume and proceeds. Among the largest transactions was Pfizer’s planned merger with Allergan for $160 billion. This transaction became a hot topic in April 2016, when the deal fell apart after the US Department of the Treasury announced a new regulation that some argue was designed specifically to block the Pfizer–Allergan merger. Also in 2015, Anheuser-Busch InBev proposed to acquire rival SABMiller for $107 billion.

Middle-market transactions remained the dominant arena for private equity investors.

Given the flurry of activity in 2015, it was not surprising to see activity slow in the first quarter of 2016. First-quarter deal volume declined by 16 percent from 2015, year to date. Sectors that have remained strong and growing include industrials, which saw a 3 percent increase in deal volume, and utilities, which saw a 213 percent increase in deal proceeds.

Private equity sponsors were able to quickly raise funds and saw strong distributions from exits in 2015. The year saw a continuing trend of distributions exceeding contributions, inspiring more limited partners to invest and reinvest in funds. Middle-market transactions remained the dominant arena for private equity investors.

Life of an Associate 

This climate provides excellent opportunities to junior corporate associates. Specifically, associates can get exposure to a variety of businesses, industries, cultures and clients. Companies continue to look to do deals, and with more regulatory regimes, corporate lawyers are needed as much as they have ever been.

Savvy junior associates take the initiative to figure out where their assignments fit in to the bigger picture.

Deals are like puzzles, and associates must be prepared to understand how pieces fit together. Savvy junior associates take the initiative to figure out where their assignments fit in to the bigger picture and how they can develop their skill sets so as to take on additional responsibilities in future transactions.

While all transactions are different, junior corporate associates at Jenner & Block may find themselves doing any number of the following on a day-to-day basis:

  • conducting due diligence and preparing due diligence reports;
  • assisting senior associates and partners in drafting and revising transaction documents;
  • preparing corporate resolutions and attending to general corporate housekeeping matters;
  • drafting and reviewing ancillary documents related to a transaction (for instance, a junior associate may be asked to prepare an escrow agreement for use in an M&A transaction or to check a company’s securities filing against the relevant securities rules);
  • coordinating the drafting of transaction documents and review of due diligence materials by the firm’s subject matter experts; and
  • conducting research on a specific issue raised by a client or a general topic applicable to numerous clients or matters.

While all of the above may require practice-specific skills, they also require certain fundamental skills that apply to lawyers at all levels. Specifically, associates need to be organized and communicate well. A willingness to work hard and pitch in as a team player is also important.

Law school does not always prepare you for life as a junior corporate associate.

As a junior associate, you should not wait for the work to come to you. Go out and find assignments, especially assignments that interest you. Consider not only the type of transaction (e.g., M&A versus securities), but also the industry involved and the size of the transaction. Larger transactions provide associates with the opportunity to observe and learn from the resolution of complex legal issues, while smaller transactions allow junior associates to draft, negotiate and handle other components of a transaction. You should continue to seek opportunities for training, learn from senior lawyers about the work you are doing, and ask for tips and feedback. Such interactions help your professional development.

Law school does not always prepare you for life as a junior corporate associate. For instance, law school doesn’t teach you how to call a specialty partner – perhaps someone in tax, IP or labor – to request that he or she take on a task related to the transaction. While you should take appropriate courses, including contracts, business organizations and secured transactions, be aware that many of those courses are theoretical in nature. The best courses will be taught by practitioners, often adjunct professors, who are in the field and can give practical insight about the day-to-day nuances of the role. Look for opportunities to take classes in contract drafting, mergers and acquisitions and anything that has to do with accounting. These are skills that will serve you well.

Life as a junior corporate associate varies with the peaks and valleys of deal flow. You may go a few weeks with very little work, then get slammed when a transaction gets underway. Being flexible, prepared and up to speed on all of your matters are key to successfully navigating your time as a junior associate. If you work hard, demonstrate a genuine interest in the area and produce high-quality work, the opportunities to work on more complex matters will present themselves.

You need to appreciate your client’s business and be interested in what the client wants to accomplish.

More and more, clients expect their counsel to be true advisers who advise not just on the relevant legal issues, but also the full scope of the business. Clients do not want to always hear “that is a business issue” or “we should ask the business people what they think.” They want your perspective on those points, too. To effectively counsel your client in these areas, you need to appreciate your client’s business and be interested in what the client wants to accomplish. The concepts can sometimes be difficult, and the work will vary from industry to industry, but if you develop an understanding of the underlying aspects of the business, you will be more likely to succeed.

This is a time of technological and innovative change, and the new economy offers challenges and opportunities for innovation in the practice of corporate law. At Jenner & Block, we hope that by leveraging improvements in technology and thinking creatively, we can continue to provide excellent service to our clients and remain competitive in the changing legal market.