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EDITOR’S RAMBLE 🗣

Over 150 of you filled in my “what are you stuck on?” survey (thank you, it’s HUGELY helpful in deciding what to build next at LittleLaw). Big congrats to Hotaru, who won the Amazon voucher in the draw 🎉

Written applications came out on top, and a bunch of you said you get stuck on “why this firm?” questions.

One thing most candidates can improve on is not just talking about a firm’s deals, but speaking about what trainees ACTUALLY do on them. And that’s because it’s hard to know what trainees do from the outside.

So, for today’s newsletter, we’ve tried to give you exactly that. We’ve partnered with the Gowling WLG team who worked on the sale of Graphwise, an AI company.

You’ll (hopefully) take a lot from it – it’s a loooong piece. But it’ll show you how trainees keep a deal like this moving.

Incorporate that into your application, and you’ll sound like someone who’s already pictured themselves in the job – which will help you show the firm you’re a safe bet to progress to the next round.

Use the poll at the bottom of this newsletter to share your thoughts on today’s edition. Your feedback helps us MASSIVELY to bring you better content from law firms.

– Idin

P.S. Want to bring LittleLaw to your uni? Applications to be a campus ambassador are open – apply here.

FEATURED REPORT 📰

🔒 How Gowling WLG locked in the price on an AI sale

What’s going on here?

Graphwise is a Bulgarian software company that helps big businesses get more accurate answers from AI, using something called a knowledge graph. More than 200 large companies use it, many in heavily regulated industries such as banking.

In August, the four investors who backed Graphwise, led by an investment firm called Integral Capital Group, agreed to sell their shares to Oakley Capital – a London private equity firm.

It's one of the largest software sales in Bulgaria's history. Graphwise's founders are keeping some of their shares and staying on to run the business.

The deal has been signed, but it hasn't been completed yet. Big deals often happen in two steps. First, the parties sign the sale contract, which commits them to the deal. Lawyers call this "exchange". Then, once any conditions are met (here, approval from regulators in various jurisdictions), the money is paid and ownership passes. That's called "completion" or "closing".

Oakley is a private equity firm. It buys businesses with money pooled from investors, helps them grow, then sells them. Here, it's buying a majority stake in Graphwise through its Fund VI.

Gowling WLG advised Integral Capital and the other sellers because, despite Graphwise being based in Bulgaria and Austria, English law governed the main sale agreement (we’ll cover why later).

We spoke to the team led by corporate partner Chris Letters, with associate Andreea Serban, trainees Meg Godsell and Will Dudley, and tax partners Kate Featherstone and Tom Rank.

How could Gowling WLG act for four sellers at the same time?

Gowling effectively had four clients on this deal. Three were investment firms (Integral Capital Group, PortfoLion Capital Partners and Carpathian Partners), plus the European Bank for Reconstruction and Development, which invests to help developing economies grow.

That raises an obvious question: how can one law firm look after four clients at once? Solicitors in England and Wales generally can't act for clients whose interests clash. It's one of the core rules set by the regulator, the Solicitors Regulation Authority (SRA). But there's an exception. If the clients have "a clear common purpose" and "a strong consensus on how that purpose is to be achieved”, the firm can act for all of them.

On the major goals, the sellers were aligned. They all wanted to sell their shares, get the agreed price and get it done without delays. But each had its own priorities, so they could still disagree on the details.

Here's a (made-up) example of how that could happen. Say the buyer offers one price and wants to sign straight away. One seller might need to hand money back to its own investors soon, so it’s happy to accept this. But another thinks it can get a better price by holding out. Both want to sell, but they disagree on exactly how and when.

So Gowling and the sellers followed some rules throughout the deal. They didn't need a new contract to do this, because the sellers' existing shareholders' agreement (the contract between a company's shareholders) already set out how they'd make decisions about a sale.

📞 One person does the talking. The sellers picked one contact to give Gowling day-to-day instructions for all four, so the lawyers never got four conflicting emails.

🗓️ Everyone stays in the loop. Regular update calls, plus extra ones at key moments, kept every seller happy with how Gowling was negotiating. Also, a representative from each seller signed off the documents.

⚖️ Sort out disagreements before coming to the lawyers. The sellers settled any disagreements in terms of their approach among themselves and came back with one answer. That meant Gowling never had to take sides between its own clients. If a conflict like that couldn't be fixed, Gowling might have had to stop acting for some (or all) of the sellers. That would have disrupted the sale, which none of the sellers wanted.

How did Gowling limit what sellers might have to pay after the sale?

One important point is that, in this deal, not all the sellers were walking away from the company.

The four investors Gowling acted for were selling every share and walking away (which lawyers call a "clean break"). Investment funds have to hand money back to their own investors, so they typically want cash and no strings attached.

Graphwise's founders and managers were doing something different. They were selling some of their shares but keeping the rest invested alongside Oakley, known as "rolling over". Buyers like this because the people who know the business keep running it, with their own money at stake. Founders like it because they get some cash now and a share of any future growth later (as well as being paid a salary for doing their day jobs in the business).

Selling a company doesn't end your responsibilities. In the sale contract, sellers typically give “warranties”. These are promises that certain things about the shares or the business are true, for example that the company isn't currently being sued, or that its accounts are accurate. If one turns out to be wrong after the deal, the buyer can ask for compensation.

So, on deals like this, Gowling will typically negotiate several protections for its clients.

📑 Investors only promise the basics. Investors typically only promise that they own their shares and have the right to sell them. These are called “fundamental warranties”. The promises about how the business actually runs, and about its tax affairs, instead come from the founders and managers, because they're the ones who know it day to day.

🛡️ Insurance acts as a shield. The buyer usually takes out warranty and indemnity (W&I) insurance covering the warranties. If a warranty turns out to be wrong, the buyer claims from the insurer instead of the sellers, as long as the policy covers it. That’s why the sellers’ liability for these claims could be capped at just €1, unless there was fraud or deliberate concealment. English law generally won’t let anyone contract out of liability for their own fraud or dishonesty.

Without W&I insurance, buyers often want part of the price set aside, either with a third party (an "escrow") or held back by the buyer (a "retention"). Any claims can then be paid from that pot. The sellers only get the rest once the time limit for claims runs out, which can take months or years.

With W&I insurance, sellers can skip that and (in the case of investors) pass their sale proceeds straight to their own investors.

👤 Each seller only pays its share. If a claim ever reaches the sellers, each should only pay its own share, known as "several and proportionate liability", so no seller has to cover for another. And no seller can ever pay back more than it received. Gowling explained the aim is that, at worst, no seller ends up worse off from the deal than if it had never agreed to the sale in the first place.

⏳ Claims have a deadline. The usual UK time limits are 18 to 24 months for warranties about the business, and seven years for tax and fundamental warranties. Tax gets longer because tax authorities can go back years to check old returns and claim unpaid tax.

How did the sellers know exactly how much money they'd get?

Here's a problem with selling a company. It keeps trading while the deal is being done, so the business on completion day won't look exactly like it did when the price was agreed.

So how do you set a price for something that keeps changing?

There are two main ways.

🧮 Option 1: Completion accounts. You agree on an estimated price. Then, after completion, you draw up accounts showing the company’s actual cash, debt and working capital on completion day. Working capital is the money tied up in day-to-day trading, like business stock and unpaid customer bills, minus the bills the company still owes. If the business has more cash, less debt or more working capital than expected, the buyer pays the difference. If it’s the other way round, the sellers pay some back.

It's accurate, but the sellers may not know their final figure for months, and the two sides can end up arguing over the numbers, which costs time and money.

🔐 Option 2: A locked box. You fix the price using accounts from a date before the deal, then "lock" the business so no value can leak out to the sellers between that date and completion. There’s no recalculation afterwards. This is what the Graphwise deal used.

Here's how a locked box works, with made-up numbers (these aren't from this deal).

Step 1: Set the price from past accounts. Say the buyer values the business at €100 million. The company's latest accounts, from 31 March, the "locked box date", show €10 million of cash and €30 million of debt. The buyer gets the cash but has to deal with the debt, so the sellers receive €100m + €10m − €30m = €80 million. That price is fixed, even if completion happens in September.

Step 2: Lock the box. Between 31 March and completion, the sellers promise not to take value out of the business. That covers dividends (payments to shareholders), management fees and similar payments. Any value that goes to the sellers is called "leakage". If the sellers paid themselves a €5 million dividend in July, the buyer would be paying for cash that's no longer there, so the sellers would have to pay it back.

Step 3: Agree the exceptions. Normal running costs, like staff salaries and supplier bills, aren’t leakage at all. That money mostly isn’t going to the sellers, and even when it is (for example, a founder’s salary) the business gets their work in return. The buyer can also let the sellers receive certain payments before completion, such as an advisory fee to one of the investors that was set before the deal. These are listed in the contract as “permitted leakage”, and the buyer takes them into account when setting the price, so the sellers don’t have to pay them back.

Step 4: Agree any “ticker”. The price is fixed at the locked box date, but the buyer only pays at completion, which can be months later. So the two sides often add a “ticker”, a daily amount on top of the price that is meant to reflect the profits the business makes in that gap. It means the buyer doesn’t get the business at a discount, and neither side gains from delays.

All of this is negotiated by the lawyers and written into the share purchase agreement (SPA). For the four investors, that was Gowling's job.

So why did it suit the sellers in this case? The Gowling team told us the locked box is common when private equity investors sell, because they want a clean break with no price adjustment later, especially if they need to pass money back to their own investors quickly. It also helps in a competitive auction, because the sellers can compare bidders' prices like for like.

With a locked box, the four investors knew their number the day they signed.

How did the lawyers check Graphwise was ready to sell?

Before buying a company, usually the buyer's lawyers investigate it to spot any issues – they review its contracts, its accounts, who owns its assets, and any legal disputes. This is called due diligence.

But here, the sellers ran a due diligence process on their own company. Lawyers in Bulgaria and Austria investigated Graphwise on the sellers' behalf and wrote up what they found. This is called a "vendor due diligence" report, and all potential buyers could make use of it. That saves every bidder from starting from scratch and duplicating work.

Gowling then read the report the way a buyer would, putting on what it called its "bidder's hat". Any gaps it found could be fixed before a buyer spotted them and used them to push the price down.

Here's what they focused on.

🗂️ The earlier merger. Graphwise was only formed in 2024, from Bulgaria's Ontotext and Austria's Semantic Web Company. Buyers look hard at recent deals like that, so the lawyers checked the merger had been done properly – contracts and software had moved across, and any historical issues that might have been uncovered had since been fixed.

As part of the merger, Semantic Web Company's founders were given shares in Graphwise. The lawyers checked those shares were issued correctly, because any doubt over who owns which shares is a red flag for buyers.

💻 Who owns the code. Graphwise's value is its software, so the lawyers checked it actually owns it. If a developer wrote code before joining the business, or in their own time, it can still belong to them unless they've signed it over. They also checked for use of open-source code. Some licences, called "copyleft" licences, say that anything built on the code must be shared freely too, which could put Graphwise's own code at risk.

🔒 Whose data it is. Graphwise's software works with its customers' data. The contracts had to make clear that the data still belongs to the customers, so buying Graphwise doesn't mean Oakley gets it.

🤝 Customers' permission. Some key customer contracts may have "change of control" clauses, which say that if the company changes owner, the customer has to agree first or has the ability to terminate the contract early. Big customers can take a while to sign off, so spotting these early is important to avoid any last-minute delays.

⚖️ New AI rules. The sellers’ side also looked at the EU AI Act, the EU's new law on AI. The AI Act’s rules depend on how AI is used, not just on the technology. Gowling told us knowledge graph software is generally lower-risk than tools like ChatGPT, but buyers still ask whether a target could need extra compliance work, for example if customers use it for higher-risk purposes.

How did Gowling bring the work across three countries together?

Graphwise is Bulgarian, part of it is Austrian, and the main sale contract was governed by English law. So who does what?

English law is often chosen for international deals because its well-developed case law and predictable courts make it a neutral option both sides can trust.

That's why Gowling was brought in. It led the negotiations with Oakley's lawyers on the English-law documents and kept the whole deal on track.

Lawyers in Bulgaria and Austria handled everything local to their countries, such as the due diligence into the companies themselves, employees, property and local rules, and preparing all local law documents that would be needed on the transaction.

Gowling told us the Bulgarian law firm had worked with Graphwise for years, so keeping them closely involved meant the team had a deep understanding of the business and where any issues might arise.

Keeping three sets of lawyers on the same page took some organising.

📋 One timeline. Everyone worked to one timetable, with shared trackers showing what had to be done and when.

📞 Daily calls. At key stages, the teams spoke every day, so nothing got stuck waiting for a decision.

🔗 Local findings in the main contract. Anything the local lawyers found had to make its way into the SPA, so the main contract reflected what was really going on in each country.

The best example of this teamwork is the tax covenant – this is the sellers' promise to cover tax bills from before the sale. It's written under English law, but the tax bills themselves would be Bulgarian or Austrian. So Gowling's tax partners worked with the local lawyers, who explained the real tax risks in each country, and together they wrote one English-law promise that covered them all.

Gowling told us clients value exactly this on international deals, with lawyers from different firms working seamlessly as one "ego-free" team.

What did the trainees actually do on this deal?

You might picture a trainee drafting contracts, and on some deals trainees do draft the supporting documents. On this one, the local lawyers prepared most of these, so Gowling's trainees, Will Dudley and Meg Godsell, had a different job. They kept the whole deal moving.

One thing that surprises trainees (especially those in transactional seats) is that a big part of deal work is project management. The benefit is you don't need to be a legal expert yet to prove your value to your team. Even early in your career, you can make a real difference on a deal like this.

Working under the team’s supervision, Will and Meg had real ownership of tasks and direct contact with the clients, local lawyers and other advisers.

Here's what that involved.

📋 Tracking every document. Meg kept a single list of every transaction document and where it was up to. Some were still being negotiated, while others were in "agreed form", meaning all sides had signed off the final wording. With three countries' worth of paperwork, that's how you make sure the right version gets signed.

📨 Spotting what matters. Emails flew in from clients and lawyers across three countries. Will pulled out the key points from each email and call, and flagged who needed to do what, so nothing slipped through the cracks.

✍️ Running the signing. This was Will and Meg's biggest responsibility. They collected the details of everyone who needed to sign and kept a "signing tracker" showing who had signed what. They also worked with the teams in Bulgaria and Austria on "execution formalities". These are the rules on how a document must be signed to be valid, and they can differ from country to country.

After several consecutive late nights in the office, the sale contract was signed on a Saturday morning. That's the "exchange" we explained at the start.

It's easy to underestimate this kind of work. But the Gowling team said this is when a junior lawyer’s work is most visible and can add the most value. Clients remember the signing, so it's a real chance to make a lasting impression.

Will said: “I was trusted with real responsibility from my first involvement, and seeing how the team handled the pressure in the final days taught me more than any textbook could. It was great to see the care I put into getting every detail right pay off in a smooth exchange with (happily!) no surprises.”

Why are investors interested in businesses like Graphwise?

Chris Letters, the Gowling partner on this deal, said it showed “the quality of technology businesses emerging from Central Europe and the strong interest from investors in AI-enabling infrastructure”.

Gowling pointed to two patterns in the deals it sees.

🤖 Software that helps businesses use AI can bring repeat business. Gowling described these as “picks and shovels” businesses. Like sellers of tools in a gold rush, they depend less on any single AI product succeeding. Private equity buyers also like that this kind of software becomes part of customers’ everyday work, so it's hard to replace. That means regular, repeat payments, which investors value highly.

🌍 Smaller technology businesses can grow together. Gowling sees investors buying and combining businesses (a strategy called buy-and-build) across Central and Eastern Europe. Bringing companies in several smaller markets together can help them serve larger customers and compete internationally. The region also has lots of skilled engineers, particularly in Bulgaria, Poland and Romania.

Gowling's job was to understand how Graphwise’s business worked and bring the legal work in three countries together to get the deal signed.

🗣️ Want to hear from Gowling WLG's lawyers yourself?

The firm’s free, virtual Discover Gowling WLG Series runs until 5 November, with sessions led by sector leaders alongside current trainees.

Reserve your place here (it only takes 30 seconds).