This article is written by Ramanuj Mukherjee, Co-Founder and CEO of iPleaders.

Career in M&A

Mergers and Acquisitions is an inorganic growth measure for businesses – where two or more companies either enter into a business consolidation (merger) or one of the companies assumes complete control over the other (acquisition). Many great fortunes in history have been created through M&A. For instance, the steel baron and the richest person ever in the world, Andrew Carnegie, created a steel empire through consolidating many smaller steel companies and almost created a monopoly. A similar example will that be of De Beers, which created a diamond monopoly by consolidating the entire diamond production industry. Sometimes, companies are forced to merge or consolidate through M&A, like in the case of Reliance and Idea Cellular, which were forced to merge in face of competition from JIO. Another famous example will be of Microsoft acquiring Linkedin, in order to grow its market share and revenues.

Lawyers play a major role in M&As around the world. From simple acquisitions where there is a slum sale of assets to complex multi party cross border M&As, there are very different scenarios, and lawyers have to navigate a multitude of issues from negotiating with regulatory bodies to making sure each parties interests are taken care of.

Mergers and acquisitions are complex, both in terms of procedure and the amount of legal expertise required. Due to the intricate nature of the deals the terms of the contract have to be drafted with utmost cognizance, negotiated elaborately and concerns of every party addressed (from labour union to the government regulatory bodies) and here’s where lawyers with proficiency in this area come into play.

As opposed to a civil or a criminal lawyer who needs to have the knowledge of only a single stream of law, a Merger and Acquisition Lawyer needs to possess a deep understanding and technical know-how of various fields of law and business. It is not just subjects like takeover code or taxation law, which are no doubt very important – but it involves a lot of work that is not written in any statute book. For instance, you might have to convince the RBI or Competition Commission that the deal is kosher. You may have to conduct due diligence on massive organizations that have entered into zillions of contracts, have thousands of vendors and need to comply with dozens of statutes and regulations every month – and ensure if the acquirer is going to bring on some unforeseen liabilities and risks through the acquisition. It is not unheard of that large corporations have been destroyed by acquiring an entity with tons of liability that were not quantified before acquisition.

As stakes are really high in such transactions, and given the importance of lawyers in these transactions, corporations obviously go for the best in class M&A Lawyers in order to have a successful transaction.

With all the technological advances that the world is going through, the businesses constructed around them are also evolving, thus the terms of a contract relating to M&A need to be detailed with extreme care to avoid future discrepancies and make the merger or the acquisition smooth and hassle free. Since the amount of hard work that is needed to be put in drafting the contracts for these deals is very high, therefore the fee charged too is in correspondence with it.

To give you an idea, when Laxmi Mittal, the steel baron, acquired Arcelor, Europe’s biggest steel company, a team of over 1000 lawyers worked on that deal! Even in smaller deals, it is common for 3-4 lawyers to work in a team given the volume of work. Sometimes law firms with a lot of M&A work set up transaction support practices or special due diligence wings to handle these matters. These teams sometimes run into 30-40 lawyers!

So basically a M&A Lawyer is the choirmaster of the legal orchestra that supervises mergers and acquisitions. He is the all in all and the backbone of the deal parties and their advisors. They serve as the focal point of contact for the rest of the deal team and have primary responsibility for guiding the transaction to a successful closing.

They may be an in-house attorney involved from the client’s side, but usually an M&A specialist practising with an outside law firm is hired to lead the deal. In many respects, an M&A lawyer is a legal jack of all trades. Core competencies include:

• strategic thinking
• negotiation
• multitasking
• delegation
• organization
• complex drafting
• attention to detail and
• critically, the ability to work quickly.

An M&A lawyer is involved in virtually every aspect of a transaction, from initial conception to consummation, though they rarely participate in setting purchase price and post-closing integration. The prominent functions of the M&A lawyers include:

• Preparing the target company for sale.
• Drafting and negotiating a letter of intent.
• To structure the transaction.
• Preparing a due diligence memorandum.
• Drafting and negotiating the principal transaction agreement.
• Drafting and negotiating bill of sale.
• To prepare regulatory filings

In furtherance of my research on how much an M&A lawyer makes in India, I spoke to several lawyers who agreed to reveal the factors which govern how much they make by rendering their services. Various models of pricing are as follows:

1. a flat fee
2. Percentage of deal value
3. Per hour fee (where the hourly rates of lawyers working are fixed)
4. Hourly fee with a cap

What are the factors that drive the price of lawyers in M&A transactions?

1. Time spent on drafting legal opinion and negotiations
2. Value/stake of M&A
3. Market/Sector to which the companies involved belong
4. How elaborate is the due diligence process (it could be very different for a restaurant chain like CCD and a software company like Zomato)
5. Regulatory permissions if any
6. Minimum advisory fees

Now that is what the firm earns. Apart from large law firms, all of whom have large M&A practices, there are many smaller boutique law firms that do M&A deals, especially with rise of M&A in SME and startup sectors. Their fees are less, especially because deal sizes and stakes involved are smaller.

It is unlikely that M&A deals will be done by a single lawyer as the volume of work is very high. Even the smallest boutiques that handle M&A tend to have at least 5-10 lawyers.

According to a former partner of CAM, who requested anonymity, and is currently heading the practice for a smaller firm, large firms charge at least INR 30 lakhs for an M&A deal, going upto 1 crore or upwards depending on complexity or time spent on a deal. Partners time can be billed @ INR 20,0000 per hour to INR 70,000 per hour in an average depending on their relative demand and reputation at the market. This money goes to the law firm coffers, not to the partner’s pocket directly of course. The partner in turn draws salary and bonus, and profit share if he has any equity in the partnership.

Associates time can be billed to clients @ INR 10,000 – 20,000 per hour, again depending on experience and reputation.

A due diligence, on the simpler side, covering 3 years only can easily cost INR 12-15 lakhs if done from a large law firm if not much more.

Now that’s what the law firms earn. What about the people working in those firms? How much do they get?

M&A lawyers work really hard. When I was working at Trilegal myself as a junior, first year lawyer (usually referred to as A0 associate in such law firms), I would easily spend 12-14 hours a day in the office. I was a part of the M&A team, and there were spells where for months I will go home at 3 am in the morning, get a nap at home and come back to office by 10-11 am. I spent almost every waking hour in the office, pouring over transaction documents. I and my colleagues will sometimes not go home at all and catch a nap for a few hours on the office sofa.  

So if you are going to work so hard, you got to make some good mullah, right? How much do lawyers earn in such firms?

A lawyer who works at Shardul Amarchand Mangaldas, on condition of anonymity, told me that in the first 2-3 years, there’s not much difference in the pay scale in a tier-1 law firm Associate working in litigation and M&A respectively. Also, the 7 big law firms pay mostly more or less identical salaries for the first few years. Depending on the success you build as a junior associate and importance of the matters you work on, salaries begin the diverge. Bonus could be substantially different though, depending on which team had a good year (profits).

The difference of salary amongst various practice areas, such as dispute resolution, banking and M&A crops up after 3 years usually. M&A lawyers tend to get the best though this is not a certainty always. A top notch banking or projects associate or partner could earn as much or more depending on the share they bring in to the firm’s revenue. Of course, M&A lawyers may have a natural advantage there.  A tier-1 law firms a M&A lawyer, at partner level (with around 10 years of work experience), receives average all inclusive annual pay in the range of 90 lakhs and 1.2 crores. There are of course stalwart partners, the shakers and movers of the M&A industry, who could take home 20 times more than that. A partner at a tier 2 firm I know of, takes home 16 times the salary of the entire team under him (which is about a crore rupees per annum).

LIST OF TIER 1 LAW FIRMS IN INDIA WHICH PAY TOP SALARY TO M&A LAWYERS

• AZB & Partners.
• Cyril Amarchand Mangaldas
• Shardul Amarchand Mangaldas
• Khaitan & Co.
• J Sagar Associates.
• Luthra & Luthra Associates
• Trilegal

Other law firms that pay top salaries to M&A Lawyers

• S & R Associates
• Pathak & Associates
• Economic  Law Practice
• Desai &  Diwanji
• Wadia Gandhy

The chart above represents the income which the M&A Lawyers receive at the end of a successful transaction based on the M&A advisory quality or the size of the deal in question. This is definitely keeping in mind number from jurisdictions like USA and EU, but Indian market is not very further from this.

Take a look at some of the M&A transactions below, and speculate – how much the lawyers would have earned out of this?

The above data is a tabular representation of recent major merger and acquisition deals in India.

Demand is on the rise for lawyers specialising in mergers and acquisitions, as the M&A market remains hot in India and companies aim to create mini in-house law firms to cut cost. Increasing M&A opportunities within and outside India are prompting companies in sectors such as pharmaceuticals, infrastructure and core manufacturing, as well as big conglomerates, to hire top talent to deal with the legal intricacies of deals. In the past six months to a year, there has been a 40-45% increase in demand for M&A lawyers in the country, with the salaries of partners ranging easily from INR 1.5 crore to 3 crore.  With the current market sentiment, the importance of M&A lawyers is going to surge therefore the future earnings of legal experts dealing with M&A is going to increase phenomenally.

Verdict: It is definitely a great time to get into M&A, if you have to skills, grit and work ethics required to be an M&A lawyer. It is a path only for the most ambitious though.

If you are wondering where to start, and how to acquire the basic skillsets and knowledge that will give you a shot at this high flying career orbit – you can consider this M&A law course. Take a look at the course specialization in M&A, Investment Laws and Institutional Finance by clicking this link here. 

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All the best!