A panel of Weil’s private equity lawyers discuss working with top-level clients, the biggest challenges they have faced in their career, and what we might see in this practice area over the next 12 months
Private equity is an area which leaves some students mystified. As a central part of the financial ecosystem, it’s an important field for aspiring solicitors to wrap their heads around. At Legal Cheek’s recent event ‘Private Equity Explored’, lawyers from leading global law firm Weil, Gotshal & Manges shed light on what life as a private equity lawyer really looks like, detailing the challenges and rewards of the career, while exploring the broader market trends impacting this fast-paced sector.
The speakers:
• Jack Gray, corporate counsel in Weil’s London office
• Ellie Fialho, counsel in Weil’s London office
• Isobel Rudd, corporate associate in London
Private equity explained: it’s more than just one thing!
Ellie Fialho kicked off the discussion with an overview of private equity, getting our virtual audience of over 700 aspiring solicitors up to speed. “Private equity is the business of buying or investing in a privately held company,” she explained, adding “that means a company whose shares are not publicly traded on the stock market.” Having invested, private equity firms “seek to build the business,” Fialho told the audience. “This may involve adding new parts to the business, removing parts that are not performing well, investing in tech, or streamlining operations. It will also typically involve aligning the incentivisation of key employees with that of the private equity fund.” And all this is done “ultimately with a view to selling or floating the business to make returns for the private equity fund and its investors and the key employees of the business.”
But where does the money for these acquisitions come from? “A private equity firm manages funds which are invested by various long-term and more passive investors like pension funds, asset management funds and sovereign wealth funds”, Fialho continued. “Weil’s funds team deal with the work of raising the fund and managing arrangements with investors through the lifetime of the fund,” said Fialho. Corporate lawyers typically become involved when it’s time to start thinking about buying or selling a company.
These are the basics, but Fialho explained that the situation is more complex: “What we mean by private equity has broadened as the market has developed.” As well as ‘traditional’ private equity, the umbrella term now includes various types of investments in different kinds of businesses. One such type is growth equity, which Fialho described as “the earliest stage of investment under the private equity umbrella”. This type involves relatively early stage businesses, that have already gone through rounds of investment from angel investors or venture capital.
Another type is infrastructure private equity, which involves investing in assets in sectors like utilities, transport, and energy. These investments “tend to be on a longer-term basis”, Fialho noted, due to the stability of businesses in these sectors.
Fialho also mentioned distressed and turnaround private equity, which “at Weil, involves collaboration with our restructuring practice but involves us as corporate lawyers as well”. This type of private equity focuses on investing in “businesses that maybe are overleveraged or in trouble” with the goal of turning their prospects around.
Private equity lawyers navigate diverse sectors across industries
With the audience now having a solid understanding of private equity, our panel discussed the types of deals they’ve worked on throughout their careers. “The great thing about this job is that you get to work across a wide range of sectors,” said Jack Gray. “In my career, I’ve worked for clients on merging two of the biggest space companies, assisted with the acquisition of Net-A-Porter, the online fashion retailer, and exploring Premier League football clubs. I’ve done insurance deals, banking deals, and even helped a client buy a bank in Africa,” he recalled. This exposure to different industries has even inspired a new hobby for Gray: “I’ve started getting into watches, which was sparked by a deal where I assisted with the acquisition of watchfinder.co.uk for a corporate client” he said.
Personal interests and private equity transactions have also aligned for Isobel Rudd, a corporate associate at Weil. “Earlier this year, one of our clients acquired a business called Audiotonix, which makes sound systems,” she shared. “Coldplay and U2 have used their equipment, and their products were even used at the Super Bowl!” While this might seem glamorous to anyone, it held particular significance for Rudd: “I got into amateur sound recording when I was at school,” she explained, “so I was especially interested in working with a business that makes the kind of products I use.”
Working with top clients: a privilege and a challenge
Discussing the differences between private equity clients and other corporate clients, Gray explained, “The clients we act for are focused on mergers and acquisitions (M&A) transactions as part of their everyday business. It’s their day-to-day.” This sets them apart from other businesses, for whom an acquisition is a less frequent event.
“From a lawyer’s perspective, you have to really bring your A-game to advise these highly experienced investors,” he continued, “and that can, of course, be challenging.” However, Gray finds this challenge stimulating: “Advising these brilliant clients is incredibly satisfying. Becoming their trusted advisor is one of the most enjoyable aspects of the job”.
Fialho echoed this, noting, “What you’re doing with private equity clients — buying and selling companies and working on management equity incentive packages — is their area of expertise.” This creates opportunities for truly innovative and exciting work. “When you have clients like this, you find yourself working on groundbreaking, first-of-their-kind projects,” she concluded.
Private equity work can be demanding, but the rewards are worth it
Life as a private equity lawyer involves its fair share of late nights and tight deadlines, our panel shared, but these are sacrifices they’re willing to make. “This practice area can be demanding because it is so fast paced,” Fialho said, “but I would happily take this trade-off for the dynamism of the work.” Hard work has its upsides as well, as Fialho went on to explain: “When you look back at your career, often the things that seemed like the worst of times when you were in the thick of them are the moments in which you really developed your skills as a lawyer and were fundamental in forging strong professional relationships with others in your team. You will really laugh about these moments in years to come.” She went on to share the details of a particularly challenging matter she worked on:
“A senior partner and I were still on a long conference call at 3am when the night secretary popped round and asked if we wanted McDonalds. So, there we were, at half past three in the morning discussing the outcome of the call, the partner with their fillet of fish and me with my chicken burger. At the time it seemed pretty dire, but now it seems quite funny and it hugely developed my relationship with that partner in a way that these types of situations have a unique way of doing. The things that are the most challenging, often result in the best rewards when you come out the other side of them,” she concluded.
Gray agreed, telling the audience: “The things that are challenging in this career are also what make it fun and worth doing.” In addition to the long hours, he mentioned unpredictability as another challenge private equity lawyers face. “You don’t know in advance what your week’s going to look like or what you’re going to be getting up to, and that lack of predictability does have an obvious downside.” However, Gray emphasised that, “one of the really exciting things about this job is that you can come in thinking you don’t have much to do that day and you’ll just be plonked on a new matter in front of a new client doing a new deal. You’ll never be bored.”
The future of private equity
Looking ahead to the next 12 months, our panel discussed the future of private equity. “There was a surge in deal activity from Q4 of 2020 through the following two years, but that momentum has slowed,” Fialho began. “Since 2022, the market has been choppier and the number of transactions has slowed” she said. Despite this, Fialho is optimistic about the coming year: “I believe deal activity will pick up again. There has been a lot of fundraising in the last five years, and those funds need to be deployed. People are realistic that there won’t be a return to the super low interest rates of 2020-21, but with interest rates expected to stabilise from their current levels in the coming months we are starting to see an unlocking of activity and hope it continues through and into the new year.”
Our virtual audience was also eager to know about regulatory and legislative changes and how these impact the private equity industry including proposed changes to carried interest and how this might affect private equity lawyers in London. Fialho was cautiously optimistic, saying, “I don’t think this will significantly impact the work we do. Deals are structured under English law and our work is all about advising clients on how to navigate and manage the challenges.”
Gray focused on the momentum of the market in the context of wider geopolitical forces. “Our clients have raised a lot of money for deals, so there’s pent-up demand to pursue high-quality assets and the industry has always been influenced by global and domestic events.” He cited US elections, the war in Ukraine, the Middle East, and global interest rates as major uncertainties — uncertainties that position Weil to be at the forefront of client’s biggest issues.
