A typical transaction

One of the big questions that everyone asks is ‘what do you actually do as a trainee?’

We therefore want to show you how a major corporate deal is done, but there’s a slight problem. One of our most serious professional responsibilities is to protect client confidentiality, so it’s tricky to tell you what made a deal interesting, without getting into some sensitive material.

So we’ve created a typical deal that is realistic in every detail, except that it’s not real.

Also, we’ve stripped out much of the complexity so that you can see the most important aspects.

The story starts on a Thursday afternoon at 6.30pm. It’s almost the end of the week and I’m looking forward to a couple of drinks in the King’s Head with some other trainees.

Click to continue to follow the progress of a major deal from start to finish.

Day 43 - That call (Thurs 6.45pm)

You know how it is, late in the week. Even the most conscientious person begins to think about the weekend and making plans.

And then it happens. The call comes through that changes everything.

Alpha Coffee, which is the UK’s third largest chain of coffee shops, is up for sale and Linklaters has been asked to advise Alpha Coffee. The partner rings an associate and the associate calls me as one of the trainees in the department, and suddenly I’m on the team too.

Although we’ve a longstanding relationship with Alpha Coffee, we can’t automatically work on the deal. First we need to carry out a conflict clearance. This is to ensure that acting for Alpha in this matter 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 senior associate 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 senior associate has been starting to pull the team together.

The core corporate team will be the partner, the associate who is quite senior and is known as a Managing Associate (or MA), a junior associate and me. The Managing Associate and I will get things rolling while the junior associate and the partner will come in alongside on the Monday. There is a system to the team selection: a work allocation partner* is responsible for allocating people to particular deals within the practice area. As well as monitoring and balancing workloads, they help trainees broaden their experience by putting different types of projects their way. 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 junior associate on the deal was my principal so it made sense for me to get involved.

Alongside the corporate team, there will also be colleagues from other parts of the firm – Real Estate; IP (Intellectual Property); Competition; Employment Law; as well as lawyers from our other offices around the world. You quite often find yourself working with friends who are trainees in other departments which is good fun.

As part of the setting-up, we’ll provide a list of contacts for the client, including our mobile numbers in case the client needs us urgently. If the coffee or retail sectors are not industry sectors some of the team have worked in before, I might need to do a piece of research on 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 more of the lowdown.

*Work allocation partner:

This is the partner within a department who is often responsible for staffing deals and making sure that teams are made up of the right combination of lawyers at various levels, based on the particular nature and size of the transaction. This ensures that the clients get the best service and also helps ensure that individuals within the department have the right balance and volume of work.

Day 39 - Data Room (Mon 12.45pm)

We’ll 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 and junior associates work on this together alongside the teams from Alpha and their 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. We send a questionnaire to the client in advance to check what they might want to include in the room, but 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 a trainee, even in my first seat, I find myself dealing directly with the CEO and FD of the client. The junior associate is with me, so I couldn’t really go wrong, but it feels 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 all 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.

*Data room:

This is the place where the due diligence information on a target business or company is gathered. It is usually put together by the seller’s solicitor to put in one place all the key documents and contracts that the company is a party to and/or describes its business and operations. It also contains information put together in response to questions about the target and requests for information from the buyer’s solicitor. The data room can be a physical room containing information on the company, or it can be an electronic collection of documents which can be accessed and reviewed by the buyer’s solicitors online.

**Due diligence:

Before a buyer enters into a contractual commitment to buy the target business or company, they will 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.

Day 38 - Due Diligence starts (Tue 12pm)

All the potential buyers will sign confidentiality agreements, and they’ll sometimes try to get our client, the seller, to sign an exclusivity deal with them (i.e. to say we won’t negotiate with anyone else), but on this occasion we want to keep our client’s options open. A big part of the due diligence process is that potential buyers will ask questions and request clarifications of certain points; I’m involved in managing the flow of questions back to the client, so they don’t get swamped with the same ones, and I also help to formulate the answers, juggling the needs of the various possible buyers. Essentially we are now in the middle of an auction and the potential buyers are all doing as much investigation as they possibly can to decide whether to buy the coffee business and, if so, how much they’re willing to pay.

Day 24 - Main Due Diligence complete (Tues 9.45am)

In this case, we’ve given potential buyers two weeks of due diligence activity to decide whether they want to proceed. We’ve given them a deadline – a specific time on a particular date – by which time they have to come back to us with an indicative offer letter*. That letter will include what they’re prepared to pay, how they’re funding the purchase, their plans for employees, any conditions or consents that are necessary and any other terms to their offer.



*Indicative offer letter:

This is a non-binding letter, sent by a potential buyer to the seller as a means of registering its interest in purchasing the target company or business. It usually sets out the terms on which the buyer would be prepared to consider a deal, including information about the price it would be willing to pay and the sort of arrangements it would want to be put in place if the deal were to go ahead. It is usually the starting point in negotiations between the seller and the buyer.



Day 22 - Indicative Offer deadline (Thurs 5.45pm)

At the same time that due diligence is being completed, we’ll be drafting the sale contract, feeding in intelligence from the kind of questions coming back from the buyer, so that we can anticipate and 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 as the process has gone on, the client will then need to select the bidder of choice. And that is rarely made just on price. There are many different considerations: for example, if we had to seek competition approval* from the UK or European Competition Authorities, the deal could be held up for months. That might be acceptable; it might not be. We also need to think about all the other conditions: indemnities and protections relating to any potential deal on the purchaser’s side. It may be that these terms make one offer less attractive than another even if the first offer includes a higher purchase price. One of our jobs is to weigh up the legal pros and cons of each offer.

*Competition approval

Whenever one company buys another, it is always important to consider whether after the acquisition the buyer has increased in size to such an extent that it becomes too large a player in its particular market. 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, leading to higher prices and less choice for the consumer. Before any acquisition goes ahead, it is important to ascertain whether the competition authorities need to approve the transaction and to ensure that the deal will not breach any merger control regulations.

Day 10 - Contract Negotiation (Tues 10.30am)

In this case, 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 senior associate the other – and there’s a bit of good-natured rivalry between the two.

Contract negotiations go on for about two weeks; we work from an issues list* of the most important commercial issues and, once those are resolved, we go through the rest of the contract, line by line. Documents are marked up with changes and 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 don’t say much at the beginning. There is quite an adversarial feel at some stages and the negotiation has really begun.

*Issues list:

This is essentially a ‘to do list’ of tasks, both legal and administrative, which need to be carried out or monitored by the Linklaters team on the deal and which quite a lot of our lawyers like to use. It also sets out the deadline for each task, who in the team is responsible for ensuring the job gets done and the current status of the task in question. The list tends to be regularly updated and circulated to the whole team to ensure that everyone is aware of what is going on and it is a good way of checking that nothing important gets forgotten.

Day 8 - Disclosure Letters (Thurs 2.25pm)

I also work on the disclosure letter*. In the share purchase agreement** our client has confirmed that certain matters and information in relation to the business are correct. These are called warranties. The purpose of the disclosure letter is to qualify these warranties (i.e. explain where they are not true) in order to limit our client’s liability.

Watching negotiations taking place is a great way of learning. During your four seats, you’ll see a lot of different negotiating styles.

The key document in the sale of the company is the share purchase agreement. When it’s signed, our client is committed to sell, and the buyer to buy. I get to work on some of the ancillary documents, which include the disclosure letter, employment contracts and stock transfer forms.

*Disclosure letter:

This is closely linked to the Share Purchase Agreement. It is prepared by the seller’s solicitor and its purpose is to disclose matters relating to the target company and its affairs which, were they to remain undisclosed, would result in the seller being in breach of warranty, i.e. in non-legal terms, where the seller makes a warranty (which is similar to a promise), the disclosure explains what circumstances might exist which makes the promise untrue.

**Share purchase agreement:

This is the document by which the parties agree to transfer the shares in a company or companies from the seller to the buyer. The agreement also contains the protections sought by the buyer to cover any risks that it may have identified as part of the due diligence process. The protections will be in the form of warranties and indemnities.

Day 1 - Final Offer (Thurs 10.05pm)

We get to within hours of the signing (it’s about 10 at night) when the preferred buyer – Charlie Coffee – does something unexpected. Out of the blue, it says that chairs and sofas from Alpha outlets were ‘worn and torn’; most of the paintwork needed re-doing; a lot of the coffee machines needed upgrading and new bathroom facilities were needed in 14 of the shops. The upshot was 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 the 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 put Post-It notes in place to make it easier to know 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 into the excitement of what is almost a theatrical event. It really shows the team working together. But there are still plenty of jobs to be done, from preparing the press releases to writing communications to employees and suppliers.

Day 0 - The Signing (Fri 5.00am)

The signing happens at five in the morning. After a successful deal, you soon realise that the people you’ve been negotiating with on the other side of the table are now on your side and you’re all celebrating together.


Day +1 - Completion Party (Sat 12.45pm)

On a big deal, there is a pretty substantial cycle of celebration. We'll often have a dinner with the client, the banks, management, everyone involved in the deal. Then a week later, there will often be drinks for the Linklaters team. Sometimes the client will hand out tombstones to everyone. This is nicer than it sounds. A tombstone* is a trophy of the deal that you keep as a memento. Trainees don't always get them, but as this was my first deal and the CEO of Alpha Coffee had dealt with me directly, I got lucky!

At the end, you feel very tired but exhilarated. There's lots of banter and it can also be emotional. I'd worked with Alpha's FD on this deal and we all knew that she could well be out of a job under the new owners. If so, we may lose her as a client. On the other hand a deal like this is a good opportunity to showcase our capability, not just to our own client, but even to Bravo Coffee and Charlie Coffee. If we impress them, they may well come back to us in the future to act on other matters.

Then it's all over and you're on to the next deal. Some partners will give you some time off in lieu if you've been working hard, but it does depend on the individual., although there is no doubt that people will cut you a bit of slack after a big deal.

And that was Alpha Coffee. My first big corporate deal. But now it's the weekend and I'm off to the pub.


This is a small token, a plastic 'trophy' really, which is usually given by the parties on a deal to their advisors (lawyers and accountants etc.) to mark the end of a successful deal. The tombstone usually contains the names of all the parties and details of the completed deal. Lawyers like to collect tombstones as they make very useful paperweights/office decorations.