M&A - Investment Bankers v Lawyers

[RubySmithers]

Hi guys,

I've been thinking about the type of questions that I could be asked at an interview, and one that struck me was about the different type of professionals involved in an M&A transaction. For example, what would a lawyer do that is different from an investment banker or consultant?

In terms of sell-side investment bankers, as I understand, their role would be to take instruction from sellers by valuing their company and then pitching to potential buyers. However, a lot of what they do appears to be similar to lawyers (i.e. drafting a letter of intent/conducting due diligence/negotiating) - how does this differ from what a lawyer would do?

If someone could provide some clarity on this, I would be extremely grateful!

Ruby

 

[M1999]

Hi! I really do not know much, but I have slight experience in the investment banking side.

In terms of an acquisition, the investment bankers will advise the client on what target company to acquire. They will do this by looking at more economic risks, what is going on in the market, and use calculations (sorry I don't know any terminology) to justify their answer.

An M&A lawyer is concerned with the legal risks of an acquisition and therefore will advise a client using due diligence research. Lawyers also negotiate on the legal terms of a contract.

Quite simply, both are advising a company that is acquiring another company. Lawyers advise on the legal side of it, investment bankers advise on the economic-y side of it. Because they're both services it can seem that they do the same, but for lawyers they are concerned with helping the client on the legal side predominantly (although this is why commercial awareness is super important because you cannot legally advise on an acquisition if you do not have any knowledge of the market etc).

I hope this helps. I am not an expert at all so I could be wrong, I just spent a week in an IB in year 12 !

 

[DrowninginSQE]

Hi guys,

I've been thinking about the type of questions that I could be asked at an interview, and one that struck me was about the different type of professionals involved in an M&A transaction. For example, what would a lawyer do that is different from an investment banker or consultant?

In terms of sell-side investment bankers, as I understand, their role would be to take instruction from sellers by valuing their company and then pitching to potential buyers. However, a lot of what they do appears to be similar to lawyers (i.e. drafting a letter of intent/conducting due diligence/negotiating) - how does this differ from what a lawyer would do?

If someone could provide some clarity on this, I would be extremely grateful!

Ruby

You wouldn't get a question about the difference of investment banking and commercial law unless you had work experience such as a summer internship in investment banking. Bankers don't do any drafting or letter writing. They make financial models on the companies and secure the financing. The lawyers make it all happen.