I know the strategy's been discussed before, but I was wondering whether anyone could shed some light on how people get into merger arb desks in banks or on the buyside. A background as an M&A analyst seems ideal but sadly that ship has sailed for me as I'm nearing on two years in the BO. People have commented that merger arb is too qualitative and is not particularly interesting within the wider realm of event-driven strategies. I'm interested in the whole enchilada as well but seeing as I've typically been stronger at qualitative subjects, I feel that merger arb might be a good starting point/strong suit to have in the event-driven sector.
I'm planning on taking the CFA starting this Fall and I'm starting to develop investment ideas on my own, mostly undervalued microcaps because of the lower-competition/relative simplicity of the area. Merger arb seems hard to do by oneself although I want to focus on 'merger securities' more (a la You Can Be A Stock Market Genius Too by Greenblatt).
Any input is appreciated.
Anybody?
i've talked to merger arb prop traders at my BB before.
only takes people with at least 2 years of corporate finance/banking experience. even DCM/ECM won't cut it. mostly ex-M&A, ex-levfin guys. and mostly post-associate. no analyst on the desk.
You should probably focus on getting into FO in general first.
Not to knock on you, but merger arb prop desks and HFs have way too many candidates to look at before looking at someone from BO.
I like your drive and all, and if i were on an event driven desk i'd get on the phone with you to help you out. but sadly odds are against you.
again, try to get into the FO space first, doesnt have to be event driven specific. One step at a time.
If you are interested, you can try to apply for sales-trader role at BB or MM banks. they execute orders for buyside traders and in my BB we have a specific merger arb salestrading team. They follow the stocks involved in merger arb space all the time but more in the liquidity/execution perspective. Get there first, then jump to the buyside. (even that step alone would be extremely difficult, but less of a black swan then BO straight to merger arb fund)
Thanks for the input. I'm definitely under no illusion that I can jump straight into that kind of role. How do the sales-trader roles you're describing differ from the usual S&T analyst route? Do they recruit people with experience that isn't FO? I wanted to get into sales back when I was senior but my interest in finance came very late in the game (plus I graduated in three years) so I completely missed the boat (Bear was still recruiting for equities but I had a weird feeling about them.)
Salestrader is under S&T.
In equity sales you have
a) research sales/generalist sales = talk to PMs of buyside and pitch trade ideas, sell the equity research b) salestrading/liquid market sales = talk to execution traders on the buyside and basically executing trades
Check out this
http://www.barcap.com/Client+offering/Global+Markets/Equities/Trade+Ins…
every BB offers something like this.
"Do they recruit people with experience that isn't FO?"
No. But that doesnt mean it is impossible to get a job there. You need to network 100 times harder (not exaggerating) than someone from FO. If you can show you are smart and capable, no reason why they shouldnt take you. but yes it will be difficult so be prepared. Let's not fool ourselves, lot of bright ppl in MO/BO want to make the switch and you need to differentiate from them.
Do you work for a large bank that has S&T? if so, network like CRAZY. email ppl to get coffee/whatever, remind them if they forget, call them, cold-call if they dont reply emails, do whatever you can.
http://www.merger-arbitrage-investing.com/
I work for a fund administrator (think BNY Mellon, State Street). There's a buyside to cross over too but the transition is excruciatingly slow and the overall attitude towards talent retention is abysmal. Plus the majority of funds they operate are passive or quantitative. I took the job so I wouldn't have to work at Starbucks but the job market just kept getting worse and worse from there. I'm actually looking into the foreign service right now, maybe be an economic officer for a while (bang out the CFA, volunteer at an EM PE fund...) and then go to b-school. I hate having to be in the BO/MO to FO rat-race, considering that I went to a Top 25 (but non-target) and had a good GPA. I've had a couple years to get over any sense of entitlement though.
Thanks for the link MezzKet.
Wat y'all kno about Merger Arb? (Originally Posted: 07/18/2012)
Good Morning You Sex'ay Monkeys,
I have an informational interview with an event driven HF this Friday. Anyone out there that wants to drop knowledge on us suckaz?
btw, I've read Stock Arbitrage by Mary Buffett and Risk Merger Arbitrage by Guy P. Wasser
I'm more interested about the day-to-day's.
Oh, and no broke mofo's and playa-hataz need to reply.
In my former sales-trader life I covered ED hedge funds.
Just be yourself and the hiring decision should work itself out quickly.
Goddammit, Swagon!
Ask them why it's an arbitrage.
No playa hataz here
arbitrage/macro (Originally Posted: 03/04/2007)
What qualifications do arbtitrage (merger, fixed income, currency, etc) funds look for? Is it a neccssity to have strong programming and math skills?
What about macrro? thanks
programming doesn't matter for merger arb. Depends on the fund. Merger arb is part science and part art. Some shops are more science and some are more art.
Just met a guy who used to be a journalist and became an arb. Was much more an art guy. Called millions of ppl digging for facts and then used his gut to evaluate it all.
Know lots of other people who are much more science-ish about it who focus much more on math (still incorporating a decent amount of art into it).
Merger arbitrage is essentially a subset of event driven arbitrage. Event driven guys tend to come from investment banking, since they're really evaluating the same things that bankers are looking at. Merger arbitrage for instance, might be if trying to assign the appropriate probability of a merger to another event--each even has a different affect on prices, so if you can better estimate event probabilities than the market, then you can arb your knowledge.
Fixed income and currency arbitrage require more math. In general, you should know at least how to program (at minimum.) Depending on the shop you may need to know more programming.
what sort of programming languages do the funds expect? I was a java hotshot in high school (won 3rd in a national competition) but as a math major, lately i've just been doing procedural programming in matlab and such, nothing too involved. is it the sort of simplistic thing that any dick on the street can pick up, or does the programming actually get a lot more involved than what's taught in Compsci 101?
no one on my desk does programming. a lot of the risk management and tech functions do it, but not us.
anything that you have to do in a front office role is basically a compsci 101. if you programmed before, and can write vba, you'd probably be leagues ahead of everyone.
one of my friends had an interview for Jane Street Capital as a trader and he said that they asked him some tough compsci questions... are you sure about that, zonk?
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