Deal Count vs Deal Size
Hey everyone
I would like to read your opinions on which is more important when trying to gain experience and knowledge in M&A. What’s better, to participate in a few big deals or to be exposed to several deals throughout the year? How many successful deals are a lot in one year?
From a CV standpoint, usually working on high profile cross border multi billion transactions looks better. Logos are easy to recognize and people get impressed easily which can facilitate a lateral movement to another bank, a transition to the buy side or a switch to another industry.
From a development standpoint, I would say number of deals and variety of transaction types is more important. You will probably learn more working on 4 deals of $100m -$250m than only working on 1 deal of 5bn. If you work on many deals you will probably get exposure to many different situations, buy-side vs sell-side, public takeovers vs private transactions, strategic vs sponsor deal, activist defense mandate, spin-offs, direct negotiation deals vs broad auctions… Getting involved on a different types of transaction is probably what’s more enriching at analyst / associate level.
That's broadly correct but from experience, the shops that do deals at the 100-250m range for example rarely (if ever) do defence, take privates, mergers, spin offs etc. They just run super broad sell side auctions and these go to advisors doing the large cap deals, even if the complex deal in question is small.
I cannot stand this take on this website. It’s so unbelievably wrong. And you and others state it with an authoritative stance/ posturing trying to inflate your experience, which is almost certainly limited based on the statement you and others make.
The crazy complex transactions almost never happen anywhere. A substantial majority of transactions are company A buys company B. The whole act like a sell-side transaction is “vanilla” and going to a large bank will have you constantly doing cross boarder-mega-merger, carve outs is delusional. Even at large banks with large dollar transactions, most the deals are really not that different than company A buys company B.
OP to answer your question, it really gets confounded with branding. Also, the answer is really “it depends what your goals are”.
It is better working at a bank that does larger transactions all else being equal. Generally because the transactions are larger, there is more professionalism and the people are more established. This is especially true when looking at deals below $100m. A bank that mainly facilitates $75m deals is likely just less sharp on average than a place like Goldman Sachs or evercore.
However, if we take branding out of it and say, “is it better to work on a big deal at Goldman or several small deals” it’s going to come down to group mattering more. If we ignore group selection, then the question of “is it better to work on big deals or many deals within my group” is likely it doesn’t matter. What matters is what you did on the transaction and what you learned.
Sophisticated hiring managers don’t care if you worked on a $5B deal or a $2B deal in the same group, people just aren’t that large of whores for deal size as this forum thinks. Brand matters, group matters a little less, quality of deal experience is a middle ground between size and number of deals. A big deal where you didn’t touch a model is useless, doing several small deals where you just did diligence is also pretty crappy.
Hey there! Swinging from the trees here with some insights for you.
Based on the most helpful WSO content, both deal count and deal size have their own importance in gaining experience and knowledge in M&A.
Deal Count: Participating in several deals throughout the year can provide you with a broader perspective and more varied experience. It allows you to understand different industries, business models, and deal structures. It also helps you to quickly sort through the "noise" and reach a conclusion, even in a completely new industry or business model.
Deal Size: On the other hand, working on a few big deals can give you a deep dive into the complexities and intricacies of large-scale transactions. However, it's important to note that deal size doesn't necessarily mean a better analyst experience. In fact, some find that deals in the $700-$1.5B range have been the most enjoyable to work on.
As for the number of successful deals in a year, it can vary widely depending on the firm and the market conditions. However, the key is not just the number of deals, but the learning and experience you gain from them.
Remember, it's not just about the quantity or the size, but the quality of your experience that counts. So, whether you're swinging from deal to deal or diving deep into a big one, make sure you're learning and growing along the way!
Sources: https://www.wallstreetoasis.com/forum/private-equity/then-and-now-compbanker?customgpt=1, Advice for New Analysts Seeking PE Exits, Factset League Tables YTD-September, If smaller banks say they offer juniors more deal exposure, why are bulge bracket positions still more highly regarded?
It depends on what you want the deal experience for.
Lets say you are looking for deal experience to help you lateral. In interviews (and on your resume), you generally need to be able to talk sophisticatedly about ~3 deals. People are generally more impressed by bigger deals than smaller ones. For example, saying you were an analyst on the team that sold $14 billion worth of gas pipelines is often more of a “this person has good experience” indicator than being on the team that bought Bombardier’s aerostructures business for $865 million, assuming you can speak intelligently about both deals.
With that being said, lets say you are an IB analyst and all you have been on are 3 closed deals each for a $20 billion industrials company. That is definitely good experience. But if you want to develop your skills and in 2/3 years you have only worked on 3 deals, you would most likely have a less complete skillset compared to someone who worked on 10 deals with each transaction being a ~$500 million transaction.
This is a long way of saying it is a balancing act
I am just starting and given that language is my biggest drawback, I must make the most of what I am given (no BB is taking me, therefore I will have to wait a few years before participating on mega deals)
If you want reps on a variety of deals, check out places like HL. They are a deal flow monster. If you want a few mega billion deals, check out the bulges and top independent advisors. However, the top boutiques will also shift to a pure quantity>quality mindset when they need revenue/md to go up. So you're risking doing trash deals just to close them.
I am looking the Mergermarket 2023 report and you are right, HL is second behind PwC (in Germany, my area of interest) in Deal count.
The reality is that I am not yet a native speaker, therefore no BB nor boutique is taking me, so I will try to get into Deal Advisory inside a consulting firm, where I have a CF internship next year (they are really good in deal count but quite small in total deal value)
My roadmap is to try to get a good amount of deals and as finish refining my German and my skills, move to a firm (hopefully a bank), where bigger deals are made.
All boutiques will sacrifice quality for quantity and lie about it, but only the worst will totally sideline quality for quantity. Only bad firms will be shooting mainly for quantity. Those are places you don’t want to work long-term.
I get your point and partially I agree with you.
But I need to face the reality of my situation and make the most of the cards I was given. Prob I will do between 2 to 3 years in this consulting firm and then move to a BB or a boutique.
Lots of banks recruit at associate level in Germany.
I disagree with some of the people on here saying mega transactions are the priority for exits and CV. Although logos have some value.
I do a lot of the junior lateral hiring at my firm.
The best experience you can get is the number of transactions & diversity of transaction types.
I also find analysts on smaller sole adviser deals have far better experience with experience over the full transaction lifecycle, versus an analyst on a mega dual/three adviser deal that does one thing on the transaction.
You know as well as I that the number of transactions only matters if it can be reliably assumed that those transactions are high quality and involved. If they’re not, the number means nothing. You’re probably interviewing people from very reputable firms that you just assume are getting them so good experience. If that’s the case, it is just a contest to see who can get the most deals. But that’s not the case for most junior bankers seeking a PE exit or a lateral to a better firm.
I think getting experience on a big deal from start to finish is infinitely more valuable than bits and pieces of many deals. I was someone who got really shallow experience on a high volume of deals and I do believe that always hurt me.
Personally is pretty clear, large cap marquee deals are what every banker out there is chasing but in reality it's all relative to where you are / want to go. I've worked on both sides and have done large and small cap deals doing everything or parts and I've always thought large cap / small volume is advantageous relative to small deals with high volume. As a junior you of course need some end to end exposure but doing that only in small deals can be problematic. Quality of client, process, analyses etc might be lower. There's a reason why while PwC churns through deals like this we all know quality of juniors and work done is poor. Having said that, LMM PE or volume m&a shops will most likely want candidates with this kind of experience whereas MF/UMM PE and BBs/EBs will prefer the opposite.
Thanks for your POV. As I mentioned earlier, I will make the most with the hand I was given and prob in 2 to 3 years, I will try to get into a BB during associate recruiting.
Echoing everyone else's sentiments, large cap sellsides (IMO) are usually the most eye-catching deals for bankers, and at boutiques they're a pretty unmatched experience. Generally, though, I think smaller deals (may) give better experience - since they're lower profile, it's a good opportunity for all the juniors and midlevels to "step up" a level.
Same for PE - the large take-private transactions are the best for your resume, but once you get a couple of those under your belt to understand the actual technical aspects of a deal, you learn the most from smaller bolt-ons and relatively smaller deals. The latter is usually lower stakes, and the firm gives you more leash to make decisions+mistakes.
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