This lesson sets out examples of typical business research tasks that trainees may be asked to carry out, as well as research sources that may be helpful in this context.
Research into companies
Company overview: you may be asked to find out when a company was incorporated; its legal status (e.g. limited, public, listed, unlisted etc.); what it does; the industry in which it operates; information about its corporate structure (e.g. whether it has any subsidiaries/a parent company); and whether it has entered into administration/become insolvent.
Financial data: you may be asked to compile financial information about a company, including its financial accounts, annual returns, management accounts and debt obligations.
Filings/announcements: you may be required to research into announcements made by a company to its investors or the public. You may also need to research into a company’s public (Companies House) filings relating to, for instance, its articles of association, registered address or directors.
Companies House: Companies House is the official registry for UK company filings and provides a great starting point for research into UK companies. Public limited companies will have more information available than private limited companies, and Companies House will likely be less helpful for companies incorporated in foreign jurisdictions.
Key personnel: you may have to find information about a company’s key personnel. For example, some of us had to identify a company’s directors (and those directors’ other directorships) when looking into potential conflicts of interest.
Ownership structure: you may be required to look into the ownership structure of a company in order to determine who its key shareholders are (including any “persons with significant control”) and whether it has any subsidiaries.
Persons with significant control (“PSC”): these are people (including legal entities) who can influence or control a company. This includes (a) persons who hold more than 25% of the company’s shares; (b) persons who hold more than 25% of the company’s voting rights; and (c) persons who hold the right to appoint or remove the majority of the Board.
Jurisdictions/location: you may need to find out where a company was incorporated or where its subsidiaries or parent company were incorporated. You may also need to research into the disclosure obligations that apply in other jurisdictions to ascertain the information that may be available about companies incorporated in those jurisdictions.
Dividends: you may be asked to look into a company’s dividend payment history.
Dividends: payments made by a company to its shareholders out of its profits/retained earnings, typically annually.
Acquisition history: you may be asked to look into the company’s previous acquisitions.
Articles of association: a document that is first drawn up by the founders of a company (or automatically generated by Companies House, if the company is adopting the model articles) at the time the company is incorporated. A company’s articles of association sets out a series of written rules (each being an “article”) that govern the running of the company. For example, articles of association will generally cover directors’ powers and responsibilities, the decision-making procedures that must be followed by directors and shareholders, the rules that apply to the issue and transfer of shares and the payment of dividends, the rights attached to each class of share that a company has in issue, and a broad range of other administrative matters. Note that as a company evolves, it might adopt amended articles of association at various points to better reflect its activities and scale.
Model articles: a standard form set of articles of association that a company can choose to adopt and if necessary, tailor to its specific needs. This can be much quicker (and cheaper) than writing new articles of association from scratch, so many new companies either fully adopt the model articles, or adopt a majority of them and make a few amendments.
Key resources for company research Companies House: use Companies House to find information about a company, including:
Note that your firm may employ third parties to assist with longer/more complex searches. In addition, through Companies House Direct (Companies House’s paid service), you can also order a “package” of filings (to save time) and/or international filings. Much of the UK-related information is free on the Companies House interface however. Practical tip: when looking for a document that the company has filed with Companies House, start by looking through the most recent filings. This is because companies may file new/amended versions of documents over time, meaning older filings may include documents that are no longer valid/in force. Company websites: company websites usually give you access to a company’s annual report, news/announcements, Annual General Meeting results and (depending on whether it is a public or private company) a certain degree of its financial information. London Stock Exchange: the London Stock Exchange website can be a good source for research into a company’s share price, bond price and RNS announcements. Jersey Companies: for information on Jersey companies, visit https://www.jerseyfsc.org. International company searches: the UK government’s website provides links to international company registries. The links can be accessed via www.gov.uk/government/publications/overseas-registries. Mint Global: your firm may have access to Mint Global, a resource which provides useful information on a company’s key personnel, legal status, dates of incorporation, insolvency proceedings (if applicable), financial information and ownership structure (including, in respect of some companies, “ownership trees” and details of shareholders with a 0.01%+ shareholding). GlobalX: this platform provides company and property information for UK and international businesses. You can commission reports covering, for instance, a company’s financial information or ownership structure. |
Research into transactions and market rumours
Below are examples of the types of information you may have to look up in relation to transactions and market rumours.
Mergers and acquisitions: you may have to look into acquisitions that have taken place in certain jurisdictions, sectors or industries, or a company’s deal history.
Capital markets: you may have to look up equity capital markets transactions (e.g. initial public offerings and rights issues) or debt capital markets transactions (e.g. bond issuances).
Rights issue: where existing shareholders receive the option to purchase additional shares, usually at a discount, in proportion to their existing shareholding. This option enables companies to raise new capital whilst affording existing shareholders the opportunity to retain the proportion of ownership that they had held before the new share issue.
Third party advisors: you may need to find/recommend third parties to advise on specific aspects of a deal, for instance forensic accountants, environmental experts, chartered surveyors, barristers etc. This could involve looking at league tables to ascertain who the top performing advisers are in a particular field.
A current/prospective client’s activities: you may need to research into the deals/transactions in which current or prospective clients have been involved. This could be in the context of, for example, determining whether any conflicts might arise for your firm, working on business development pitches, or even assessing the terms to which a business has agreed in the context of a previous deal (which could help to determine a starting point for the terms of a new deal).
Key resources for research into transactions and market rumours Bloomberg: Bloomberg provides information on deals (predominantly involving public limited companies), as well as certain debt-related information. What’s Market: this is a useful resource for accessing summaries of deals that have taken place. Merger Market www.mergermarket.com covers global deals other than inter-Latin American deals, including information on market rumours and market intelligence. Private Equity News: www.penews.com provides information on market rumours and market intelligence relating to the activities of private equity firms. Debt Wire: this is a useful resource for accessing information relating to bonds, loans, stressed debt, corporate restructurings and leveraged finance. Perfect Information
|
Capital markets: these are financial markets that link organisations seeking capital with investors looking to supply capital. Securities including shares and bonds are traded in the capital markets between governments and companies seeking capital, banks, private investors and other investors such as hedge funds and pension funds.
Research into the financial markets
The below are examples of the types of information you may have to look up in relation to the financial markets.
Exchange rates: research into exchange rates can be useful when drafting a prospectus. You may also need to look up historical exchange rates when working on client bills (especially in the context of litigation, where you may need to determine which costs to claim back). This is because third party advisors/suppliers may be located in other jurisdictions and might therefore require payment in a different currency. Invoices may also need to be converted into GBP before you can claim back those costs in court.
Interest rates: interest rates can give some indication as to the availability of credit or the affordability of a proposed deal. Clients may require this kind of information in the early stages of a deal, as it can affect the viability of a proposed transaction.
Market capitalisation: you may need to research into a company’s market capitalization (the size of its market share). This could be especially relevant in the context of competition law, where a deal may be unable to proceed if it would be deemed “anti-competitive” (e.g. if the company that is looking to acquire/merge with another company would have too great a market share post-acquisition/merger).
Prices of commodities, shares and other securities: your client may want you to help them keep track of, for example, the share price of a company that it is considering acquiring, the market prices of a target’s commodities, competitors’ share prices, the prices of other securities, or the impact of certain events on the financial markets (e.g. Brexit).
Analyst recommendations: you may have to look into analyst reports/recommendations relating to particular securities (for instance: buy, sell or hold). This is because such reports/recommendations can give an insight into the financial performance of/market sentiment relating to companies.
Credit ratings: a credit rating can indicate how financially secure a company is perceived to be and the extent to which that company may be able to borrow at viable rates. This kind of information about a prospective borrower will likely be essential for lenders.
Credit rating agencies: these assess the likelihood of organisations or sovereigns being able to repay their debts. If a company has a high credit rating, its debt is perceived as a less risky investment and the borrower can typically borrow at a lower interest rate as a consequence.
Key resources for financial market research Bank of England: the Bank of England website includes a database of historical daily exchange rates based on the average exchange rate on each particular day. You can also access information on interest rates. Bloomberg: this is a good source for supply and demand statistics and up-to-date share prices. Moody’s, Fitch Group or Standard & Poor’s: these are the main agencies that rate the credit of organisations and sovereigns. |
Research into industries and markets
Key players: if you are working on a client’s bid (e.g. their pitch to be selected as the preferred buyer of a business or asset), or even checking whether any conflicts may exist in relation to a prospective client, you may have to look into the key players in that client’s particular market, including its main competitors.
Market statistics: you may also have to look into the size of the client’s market and if/how that market is segmented. This could indicate whether competition authorities are likely to approve/prohibit certain courses of action.
Trends, outlook and analysis: clients may ask for information on their particular industry or for an opinion on whether the current climate would help/hinder proposed courses of action. This could require you to research into market trends, reports on what may happen in that market in the future and analyses of the market as it currently stands.
Summary of key resources for industry/market research Nexis Direct: this is a good starting point and can enable you to search based on industry and/or geography. The Financial Times: the Financial Times website – FT.com – provides regular industry reports. Bloomberg: provides access to analyst reports, both from its own analysts and from investment banks. These can cover industries, supply and demand statistics etc. IJ Global: provides information on infrastructure projects, which can be useful in the context of project finance transactions. Thomson One: this resource lets you specify geographical areas, company mentions, analyst reports etc. when narrowing down your search. However, it is an expensive resource, meaning it may not be available for general research (some firms only pay for access for designated research teams). eFinancialNews: this provides news relating to the banking industry. www.inframationnews.com: this provides news relating to infrastructure proposals/transactions/investments. |
News and current affairs
You may need to research into general business news, political affairs or events affecting different economies. This could help you to, for instance, contribute to a business development pitch or meeting, or gain a better understanding of the context of a case or transaction. Research into current affairs could also assist with the production of internal or external publications (e.g. thought leadership pieces) designed to keep lawyers/clients updated and promote the firm’s brand/expertise.
Summary of key news resources Commercial Law Academy: our Discussing current affairs and industry trends course also offers in-depth advice on how to research into and confidently discuss current affairs, including how to select which news stories to focus on, what to consider when reading the news, and how to structure your discussions of news stories. The course also includes recordings of our monthly current affairs wrap ups with Watson's Daily (which provide insights into key current affairs from a business, markets and legal perspective), as well as regular reflections on legal industry trends and challenges and an insight into how legal technology is changing the legal landscape. Nexis Direct: this is a good place to start for research into business news, as it aggregates a broad range of business news from sources including the Economist, Wall Street Journal and UK newspapers. The Financial Times: the Financial Times website provides news relating to different jurisdictions, markets, companies and more. It also provides opinions and sets out the day’s leading business/finance-related headlines. The Economist: (both in print and online) provides an overview of the most relevant topical issues affecting the business world, the economy and the political landscape. Watson's Daily: curated daily, weekly, monthly and yearly digests summarising the most important topical news stories and explaining why each matters. BBC Business News: www.bbc.co.uk/news/business provides a concise and straightforward account of current affairs. Helpfully, there are usually links at the bottom of articles to related articles, which can help you to build a more comprehensive understanding of different topics. Bloomberg: as mentioned, Bloomberg provides information on global business news/trends. |
Consider using your commute to/from work to keep abreast of the latest developments. Many of the above sources enable you to set up alerts so that headlines and articles appear in your inbox when they are published. Setting up alerts relating to your current seat can also help you to stay on top of relevant current affairs without requiring much effort on your part.
Some sources also let you subscribe to useful ‘daily digest’ summaries of key news articles, which can really help to keep you up-to-date with what is going on in the business world. Also consider following well-known commentators and publications on Twitter, delving into blogs focusing on professional services and reading client alerts published by firms.
" } }