It's our business, to know business
Because business matters to our clients, it matters to us. So we’ll expect you to be interested in the commercial world and the issues that affect both our clients and our firm.
Before you come to interview, we recommend you pick one or two key business or legal stories that interest you. Then we’d like you to follow them for at least a couple of weeks, so you’re ready to discuss them with us. Some good places to start include Lawyer2B, BBC News Business, The Economist, The Financial Times, and broadsheet newspapers. There are also a range of commercial awareness books available.
Top tips for demonstrating commercial thinking:
- Learn how a deal works
- Read our ‘Thought Leadership’ papers
- Attend one of our workshops
- Get up to speed with business and market trends – read the business press and watch the news
- Form your own opinions
Commercial awareness is, in its purest form, understanding the key concerns of clients: their size and shape, the markets they operate in, their competitors, the risks facing them and their future direction. It's about understanding how the client can deal with regulations, finance an acquisition or meet ongoing funding needs. There are many technically able lawyers, but the ones who impress clients – and excel – are the ones who understand clients’ businesses.”Christopher Williams, Managing Associate
A typical transaction
So what do you actually do?
We're often asked, "what do you actually do as an Associate?". Providing an answer is not as straightforward as it might seem, as we're professionally bound to protect client confidentiality and can't share sensitive details of real projects. However, what follows is a diary of a typical major deal you'll work on.
Day 43 - That call (Thurs 6.45pm)
The story starts on a Thursday evening at 6.30pm. It’s almost the end of the week and I’m looking forward to going to dinner with some other lawyers. You know how it is, late in the week. Even the most conscientious person starts making plans for the weekend. And then it happens. The call comes through that changes everything. Alpha Coffee, the UK’s third largest chain of coffee shops, is up for sale and Linklaters has been asked to advise.
The Partner rings an Associate and they call me, and suddenly I’m on the team. Although we’ve a longstanding relationship with Alpha, we can’t automatically work on the deal. First, we need to carry out a conflict check. This is to ensure that acting for Alpha won’t create a conflict of interest with our work for other clients. We have to work fast because the client is waiting, but our global deal database has all the information we need. If any potential conflict does show up, the Partner will make a quick call to the lawyers involved to clarify the position. Fortunately on this one, we’re clear to go.
Day 42 - Setting up (Fri 9.30am)
While the Partner is writing to the client to explain that we would be 'delighted to act', the Managing Associate has been starting to pull the team together. The Managing Associate and I get things rolling while the Associate and the Partner join on the Monday. There's a system to the team selection: a Work Allocation Partner is responsible for allocating people to deals in the practice area. As well as monitoring and balancing workloads, they help Associates broaden their experience. In this case, I’d worked on a couple of IPOs (that’s 'Initial Public Offering' or a float), so the Work Allocation Partner felt it would be a good idea for me to work on a big sale. Also, the Managing Associate on the deal was my Principal so it made sense to get involved.
Alongside the Corporate team, there are also colleagues from other parts of the firm – Real Estate, Intellectual Property, Competition, Employment Law – as well as lawyers from other offices around the world. You quite often find yourself working with friends who are Associates in other departments, which is good fun. As part of the set up, we provide a list of contacts for the client, including our mobile numbers in case the client needs us urgently. Because the coffee or retail sectors are not industry sectors some of the team have worked in before, I research the coffee shop industry, so that everyone properly understands the client’s business. The firm is split into sector teams as well as by geography and practice area, so we will call the retail sector team on Monday to get the lowdown.
Day 39 - Data room (Mon 12.45pm)
We ask the library to send us emails each morning forwarding any news or rumours about Alpha appearing in the morning’s press. One of the first jobs is to help the client draft the information memorandum, which is a statement of the intention to sell the business and includes the basic dimensions of what’s on offer and of the assets and risks of the business. The Managing Associate and Associates work on this together alongside the teams from Alpha and its investment bank.
My first big job is to help to build the data room. This is a real or virtual collection of all the relevant documents relating to the business. Potential buyers scrutinise them as part of the due diligence process. Before a buyer enters into a contractual commitment to buy the target business or company, they want to acquire as much information about it as possible.
The aim of due diligence is for the buyer to gather detailed information about the target, including information not publicly available, to enable the buyer to decide whether or not to go ahead with the proposed acquisition and, if so, on what terms, and for what price. We send a questionnaire to the client in advance to check what they might want to include in the room. Then we go to meet them, to discuss the business and collect all the relevant contracts and documents, from leases and supplier agreements to employment contracts and pension scheme details. So as an Associate, I find myself dealing directly with the Chief Executive Officer (CEO) and Financial Director (FD) of the client. The other Associates are with me, so I can’t really go wrong, but it's quite nerve-wracking, nonetheless. It’s not a question of piling up documents, there’s a real satisfaction in building the big picture of the business in its entirety and getting a feel for what’s really being sold – and why!
When the data room is set up in one of our meeting rooms, we can start making plans for interested buyers to come and review the documents. In reality, there will often be more than one data room, so that we can maintain the confidentiality of potential buyers by letting different teams visit different rooms. After all, we can’t let the various teams even see each other, so it takes careful management. We’ve also got decisions to make such as whether they can take copies of documents and how much time should we give them.
Day 38 - Due diligence starts (Tues 12pm)
Day 24 - Main due diligence complete (Tues 9.45am)
Day 22 - Indicative offer deadline (Thurs 5.45pm)
At the same time that due diligence is being completed, we draft the sale contract, feeding in intelligence based on questions coming back from the buyer. It means we can head off any problems before they arise.
For me, the excitement is in the teamwork. We’re working incredibly hard to make a lot of different things happen at once; we need to liaise carefully between people so all the different workstreams and threads work seamlessly and everything happens on time. Having narrowed down the number of potential buyers during the process, the client now needs to select the bidder of choice. And that is rarely made just according to price.
There are many different considerations. For example, if we have to seek competition approval from the UK or European Competition Authorities, the deal could be held up for months. The competition authorities in the UK and in Europe have created regulations to prevent the accumulation of monopolies or excessive market shares as these have an anti-competitive effect on the market. We also need to think about indemnities and protections relating to a potential deal on the purchaser’s side. It may be that these terms make one offer less attractive than another even if the first includes a higher purchase price. One of our jobs is to weigh up the legal pros and cons of each.
Day 10 - Contract negotiation (Tues 10.30am)
The client decides to take two bidders into the next phase. This means that we have to run two sets of negotiations in parallel with two different teams – with the Partner running one and the Managing Associate the other – and there’s a bit of good-natured rivalry between the two.
Contract negotiations continue for about two weeks; we work from an issues list - essentially a ‘to-do list’ of tasks, both legal and administrative - of the most important commercial issues and, once these are resolved, we go through the rest of the contract, line by line. Documents are marked up with amendments and then reproduced in the new form. I’m not directly involved in the main negotiation, but I do go along to many of the subsidiary meetings that support it. I get to go to some of the big meetings too, although I don’t say much at the beginning. There is quite an adversarial feel at some stages and the negotiation has really begun. Watching negotiations taking place is a great way of learning.
Day 8 - Disclosure letters (Thurs 2.25pm)
Day 1 - Final offer (Thurs 10.05pm)
We get to within hours of the signing when the preferred buyer – Charlie Coffee – does something unexpected. Out of the blue, they claim that chairs and sofas from Alpha outlets are ‘worn and torn’; most of the paintwork needs re-doing, coffee machines needed upgrading and new bathroom facilities are needed in 14 of the shops. The upshot is that the CEO of Charlie Coffee wants a seven-figure reduction in the purchase price.
Our client strongly disagrees. No improvements need making to the shops. This is just a 'try on' and Charlie Coffee is trying to buy the business for less than it’s worth. It’s at this point that I realise the wisdom of taking two preferred buyers to full negotiations: we’ve got two options. Within five hours, we agree a deal with Bravo Coffee on the original terms. Everyone, except Charlie Coffee, is absolutely delighted.
The deal is to be signed and completed in a day, so, as soon as the perimeters are agreed, we go into overdrive again to finalise documentation. It’s all hands on deck! The final mark-ups are exchanged and then new, agreed copies produced. You have to prepare exactly the right number of documents for everyone to sign. I usually use Post-It notes in place to make it easier to track what needs to be done. I’m going to be responsible for making sure that everything is signed properly, so I’m quite nervous. It has to be done right. We’ve gone from the cut and thrust of negotiation to the excitement of what feels like a theatrical event. It really shows the team working together. But there are still plenty of jobs to be done, from preparing press releases to writing communications to employees and suppliers.