Mergers and Acquisitions (M&A)
What is M&A?
- M&A bankers advise client companies on mergers (which means that two companies join as equals) and acquisitions (i.e. one firm buys another)
- Specialists in this field have the chance to work on deals that reshape entire industries
- To bring a transaction to successful completion M&A bankers need to go through various steps:
- Identify potentially relevant target companies based on defined acquisition criteria that are directed by management
- The available information can be used to decide whether a deal is feasible or not
- Unreasonable price expectations, operational differences or cultural contrasts might thwart a deal.
- A very important step in the M&A process is due diligence: the evaluation and confirmation of financial and operational information, as conveyed by the target company’s management as well as assessing operational and legal risks behind the deal.
- After this is completed, one needs to go through the valuation and the structuring of the deal
- This stage involves applying a combination of valuation techniques, such as the discounted cash flow (DCF) method.
- M&A professionals also look at similar companies within the industry and assess comparable multiples.
- Structuring the deal involves negotiating issues such as pricing, salaries, ownership liabilities and securing financing for the deal.
- People working in M&A typically specialise in a particular sector (e.g. media and telecommunications, natural resources or financials)
- The more senior you get in M&A, the more you’ll face clients.
- As a junior, your main tasks will include complex financial modelling and doing research to put together ‘pitch-books’.
- This is a document a firm will use to outline its ideas on which companies a client should be buying, or which it should be selling to.
- The key focus on an analyst’s work is on financial modelling and valuation. The same is true for an associate, even though associates take on ‘higher level tasks’.
- As you rise up the hierarchy, you obtain more and more responsibility for the strategic side of the deals and the negotiations with stakeholders of the M&A process.
- Considerable commitment with long working hours
- M&A bankers advise clients at what are often stressful and critically important periods in a company’s lifetime. This requires them to be available whenever the client needs them, whether that be late at night or over weekends.
- You need stamina and attention to detail.
- Despite the high workload, the work needs to satisfy the highest standards of accuracy due to the high stakes involved in every transaction.
- Numerical and analytical skills are essential, since the main focus is on dealing with a company’s financial situation.
- Languages can be useful for working with oversees clients.
- Good social skills as you will be working in teams and deal with clients.
- The more senior you become, the more important are negotiations skills, networking and the ability to build up and maintain relationships with clients.