18 Investment Banking
Mergers & Acquisitions big deals, sharp suits and intense competition
When people think of investment banking, it’s invariably the sharp-suited individuals working on big deals in the mergers & acquisitions (M&A) team. Because of its glamorous reputation, it is one of the most competitive sectors to break into.
As the name suggests, M&A teams in investment banks advise client companies on mergers (where two companies join together as equals) and acquisitions (where one firm takes over part or all of another). Big investment banks only get involved with transactions worth at least $100m, and at the top end, the deals can be worth billions.
A career in M&A demands considerable commitment. M&A bankers advise their clients at stressful and critically important periods in a company’s lifetime. Every deal is unique, and competition between banks is intense, so deadlines are tight and the hours can be punishing. Junior bankers can expect to be busy assembling the required financial information and legal documentation late into the night, if the deal demands it.
“A successful M&A banker should be a hopeless optimist because the reality is that the majority of prospective deals don’t happen for one reason or another,” says Jim Frawley, US head of M&A at Macquarie Capital. “You inevitably spend a lot of time and effort on things that never come to fruition – but to be successful, you cannot let that discourage you from working just as hard on the next potential deal.”
key players Global M&A ranking 2012 by deal value ($bn)
Deal bank
1. Goldman Sachs 2.
J.P.Morgan
3. Morgan Stanley 4. Citi
5. Barclays Source: Dealogic
value 632.6 500.4 497.2 448.1 426.4
market share
23.3% 18.5% 18.3% 16.5% 15.7%
Key players
M&A revenues have been harder to come by in recent years, with the overall deal value in 2012 falling by 47% since the boom of 2007, according to Ernst & Young. US players still dominate the market.
Roles and career paths
There is a relatively straight route up the career ladder in M&A. You start out at analyst level for three years, move up to associate for three years, then vice president, director (or executive director, depending on the bank) and managing director. Within those roles you have a chance to focus on sectors such as consumer, financials, oil and gas, or media and telecommunications.
The more senior you get in M&A banking, the more you’ll deal face-to-face with clients. At the junior level you may attend client meetings with more senior bankers but mainly you’ll be focused on complex financial modelling and research to compile the ‘pitch book’ – the document the firm uses to outline its ideas on which companies a client should buy or sell to.
As an analyst, your key tasks will also include working on these client service presentations. A lot of this will involve building a financial model, valuing a company or benchmarking it against its peers.
It is only later that you step away from the number crunching. The key difference between an analyst and an associate is that an associate takes a little more responsibility for the transactions and projects.
7/10 8/10 9/10 6/10 the overview
Revenues have been tougher to come by in M&A
Juniors roles are all about number crunching…and working long hours
Working with clients comes further up the career ladder
Jim Frawley
US Head of M&A, Macquarie Capital
You inevitably spend a lot of time and effort on things that never come to fruition – but to be successful, you cannot let that discourage you from working just as hard on the next potential deal.
How hot? Money Kudos Opportunities
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