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.