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In the eye of the storm

In the eye of the storm

They are the rainmakers of the legal world, the lawyers who sit at the table on billion dollar M&A transactions. Justin Whealing finds out what makes them tic

They are the rainmakers of the legal world, the lawyers who sit at the table on billion dollar M&A transactions. Justin Whealing finds out what makes them tick.

For Stuart Byrne, it is the morning after the night before.

It's 11am on a Wednesday, and the head of Clayton Utz's equity capital markets (ECM) team was working on a transaction until 3am before meeting me at the firm's new Sydney digs, which still have that "just moved in" feel and smell.

Remarkably, Byrne looks healthy, even fit, with no signs of last night's lack of sleep or the type of saggy skin or lack of condition one might expect from a lawyer who regularly works for more than 12 hours each day.

As we speak, it is not hard to imagine him hurtling around the rugby field as he used to do before his legal career became his main game.

These days, Byrne is a heavy hitter in the corporate legal world as one of Australia's foremost capital markets lawyers. Surely, Stuart, there are some days when you just want to turn off the BlackBerry and read a good book for a while?

"It is never about the dollars, or if a deal is in the paper, or if it has lots of zeros after it. That sort of thing never grabbed me. I have tried to work it out, but I think it is a sense that in this area, I can provide a contribution that helps clients do something they want to."

Stuart Byrne, national head of equity capital markets, Clayton Utz

"Friends ask me, 'Why do you work the hours you work and why do you work with these clients who can be quite demanding?" he says, when reflecting on what motivates him to work the hours he does. "It is never about the dollars, or if a deal is in the paper, or if it has lots of zeros after it. That sort of thing never grabbed me.

"I have tried to work it out, but I think it is a sense that in this area, I can provide a contribution that helps clients do something they want to."

Byrne has had a seat at the table at most of Australia's major capital markets deals over the past few years.

With his great friend and mentor, the late Greg James - whom Byrne replaced as the head of the firm's ECM team - Byrne acted for the banks on the $2 billion Myer IPO, the issuer Kathmandu on its $332 million IPO and advised long-standing Clayton Utz client, the port and rail operator Asciano Limited, on its $2.35 billion placement and recapitalisation in 2009 when that company was in a great deal of financial stress.

Byrne cites that deal as providing a good case study of how tight the deadlines can be when working on such transactions, and how he derives his satisfaction from acting on deals, like this one, where he says he "didn't sleep for one week".

"This was a make-or-break, direction-changing transaction for that company, and they were an especially valued client of the firm, in that the management of the company was very well known to us and we had had a long association with that business," says Byrne. "I remember the sense of satisfaction I got in managing to motivate eight partners and staff, a total team of 17 people, in 30 minutes.

"They were working from the Thursday until the Tuesday, when the deal was launched," he says.

It is that adrenaline rush that comes from working to tight deadlines under immense pressure that sets M&A and capital markets lawyers apart from the rest.

"What we love and what we hate about the job, they are almost the same thing"

Craig Semple, M&A partner, Mallesons Stephen Jaques

"What we love and what we hate about the job, they are almost the same thing," says Mallesons Stephen Jaques M&A partner Craig Semple. "The pressure of making the right call, of exercising the right judgment, of physically getting things done, they are experiences which sometimes don't seem very enjoyable at the time, but when they are over, you think 'geez, I enjoyed that'."

Semple has been involved with some of the largest and most controversial corporate deals over the past decade. As a young lawyer, he cut his teeth on transactions such as the Telstra privatisation and initial listing on the Australian Stock Exchange in 1997 and the demutualisation and listing of National Mutual, which later became AXA. Since stepping up the partnership 10 years ago, Semple has carved a reputation as one of Australia's leading securities and restructuring lawyers.

He says that when you are in the middle of transactions such as the National Australia Bank takeover of 80 per cent of Goldman Sachs JBWere's private wealth management business in Australia and New Zealand - a deal that gave the NAB over $50 billion in funds under advice and management-concepts of work/life balance go out the window.

"The thing that people not in this field find it difficult to understand is that if you are an M&A lawyer, and as pathetic as this sounds... that is really what you love," he says. "The thing that is the great anomaly here is that the times where it is really intense and you lose balance and you are working long hours, working with your client and your colleagues, there is a feeling that you're in the trenches together, and there is a great camaraderie.

"There is the adrenaline pumping and you are all working towards a common goal. They are the most rewarding times as well."

Keeping the umpire happy

As can be seen by the rejection of the proposed $8.4 billion merger between the Australian Securities Exchange and the Singapore Exchange, the ACCC taking Federal Court action to oppose Metcash's attempted takeover of Franklins, and the ASIC-inspired reforms on the information in a prospectus, the regulators are now baring their fangs.

The actions of lawyers, perhaps more than ever before, are now under the microscope, and clients are demanding that their lawyers have the negotiating skills to seal a deal with the regulators.

"You need to know the regulators and spend time with them to develop relationships and to understand what is important to them," says Freehills partner Tony Damian, who certainly has a good track record when it comes to dealing with regulators and smoothing the waters for big deals. In 2009 he successfully acted for Gloucester Coal in representations to the Takeovers Panel when it had attracted the interest of its eventual acquirer, the Noble Group, and was the lead partner on notable deals such as Eldorado Gold's $8 billion merger with Sino Gold in 2009.

He also acted for the Commonwealth Bank on its successful acquisitions of BankWest and Colonial respectively.

"The importance of relationships with the regulators bear testament to the importance of conducting business face-to-face"

Tony Damian, partner, Freehills

"The importance of relationships with the regulators bear testament to the importance of conducting business face-to-face," he says. "Often they have subtleties or concerns that you will only understand by spending time with them."

The head of the national M&A group at Blake Dawson, Marie McDonald, has been a partner at her firm for over 20 years.

During that time, she has worked on some of Australia's most talked about transactions, such as the proposed $US66 billion merger between BHP Billiton and Rio Tinto, which drew the scrutiny of a suite of global regulators. She says that, as compared to the 1990s, lawyers need to place more emphasis on a much wider set of skills.

"In the 90s in this area, as a lawyer, you spent lots of time looking for loopholes, and it was all 'black letter law', going to Court and litigating takeovers"

Marie McDonald, national head of M&A, Blake Dawson

"In the 90s in this area, as a lawyer, you spent lots of time looking for loopholes, and it was all 'black letter law', going to Court and litigating takeovers. But since the Takeovers Panel was reinvigorated in 2000, there has been this overlay across black letter law, of having to be able to run your takeover in a way that complies with the Panel's policies and principles," she says.

"As a result it is much more interesting and satisfying for M&A lawyers, as well as providing a better outcome for shareholders."

Dusting yourself off

One of the pitfalls of being an M&A lawyer is that you can often put in months or years of work, such as the failed merger between BHP Billiton and Rio Tinto on which Marie McDonald spent over two years, with no deal at the end of it.

Last year Stuart Byrne was the lead partner on the proposed $1.3 billion Valemus float, which was pulled by its German parent company not long before its launch. Byrne led a team of around 18 partners and 30 lawyers on what would have been one of Australia's biggest capital markets transactions last year.

He says that to be a successful M&A lawyer, you need to be resilient and cope with such setbacks, and he concurs with Craig Semple, who says; "You learn to be philosophical with these things and still realise that you have produced work of the highest quality".

"In the recent experiences I had, like Valemus and a couple of other private equity floats that didn't go ahead as floats, there is always that tremendous let down that you have been working hard as a team," says Byrne. "That is when you go out, have a few beers and come back out on Monday and get back to working out how it could be done and, in the case of Valemus, after a brief pause, re-engaging with Lend Lease and seeing that through on the M&A side to the completion of the trade sale and, on the private equity side, to completion on the trade sale."

Sometimes it is how you played the game, rather than the final result.

Like this story? Read more:

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In the eye of the storm
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