Private equity is a type of investment where investors’ money is used to buy out businesses. It’s like Dragons’ Den! In private equity deals, the investor buys a controlling stake in the business. So next time you’re watching the BBC show, that’s what Peter Jones, Deborah Meaden and their fellow Dragons are striking a deal upon – a controlling share of a business.

Private equity firms or individuals really want to increase the value of the company they’re investing in – usually by increasing the profits and growing the business. They then look to sell the company (or their share of it) after a few years, usually three to seven (known as an ‘exit’).

Why is it important? What does it involve?

Private equity lawyers have an important role in a deal as they help the private equity firm or individual negotiate the terms on how they contribute their cash and they also act on behalf of the private equity firm or individual when it buys and sells investments.

The private equity lawyer has the job of making deals happening and keeping clients in line with the law. When businesses are being bought or invested in, lawyers’ structure and negotiate the acquisition and finance documents. They then close the transaction and establish the business and legal structure for the new company.

When a private equity firm or individual wish to sell a company, private equity lawyers negotiate terms for the acquisition and advise on tax and disclosure. Usually, these are in time-sensitive situations where confidentiality is key.

Private equity lawyers’ work with some very influential private equity investors and are expected to provide sound legal advice on all aspects of a deal as well as displaying their commercial expertise. Given that private equity lawyers spend every day working for clients in the financial market, they should be able to solve business problems.

Break it down for me a little bit!

Private equity lawyers will draw on many of the skills a ‘normal’ mergers and acquisitions lawyer possesses. However, due to the different nature of investing in comparison to merging or acquiring (i.e. keeping the same management rather than replacing them), the exact terms of a deal may be more complex, making the work challenging and interesting. Additionally, and for obvious reasons, private equity law overlaps with finance and tax law and also competition law at different stages in the deal.

To succeed as a private equity lawyer, you will need to possess an abundance of energy, be able to work effectively as part of a team and also be pretty handy at problem-solving. As touched upon above, commercial awareness is vital as it means your advice will be on point and up-to-date.

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