Mergers and acquisitions (abbreviated M&A) is an aspect of corporate strategy, corporate finance and management dealing with the buying, selling, dividing and combining of different companies and similar entities that can help an enterprise grow rapidly in its sector or location of origin, or a new field or new location, without creating a subsidiary, other child entity or using a joint venture.
Roles and Career Paths
Mergers and acquisitions is principally an advisory role. When public companies announce they're "exploring strategic opportunities," they've hired an investment bank to advise them on a merger or acquisition. Rarely does the work involve sprucing up existing operations.
Traditionally, M&A bankers advise clients on all aspects of buying, selling, and merging with other companies. They're typically part of a broader corporate finance advisory team, which also advises firms on how to raise the money needed to finance a transaction. Among large investment banks, a recent trend is for a separate unit to also participate directly in the deal. Goldman Sachs Group became a leader in this when it created its own private equity arm.
As a rule of thumb, the more senior you become in M&A, the more contact you will have with clients. But as an analyst, you'll spend a lot of time working on pitchbooks, which outline a bank's ideas for a particular transaction (for example, should the client buy company X or company Y and, if so, how should the deal be financed?).
Analysts in the M&A division usually conduct basic industry research and build the financial models used to price the companies concerned. Associates, who are one level higher in the banking hierarchy, oversee analysts' work and check that their models are correct.
A further rung up, vice presidents oversee the work of analysts and associates, and often ask for the pitchbook to be partially or completely rewritten - even if it means staying up until the early hours of the morning. Vice presidents report to the directors and managing directors who are the main points of client contact.
It's not unusual for pitchbooks to come to nothing. Clients may decide not to go ahead with the suggestions, or they may engage a rival bank. When a pitchbook elicits a positive response, the M&A team moves into execution mode - seeing the deal through to completion.
If you're interested in pursuing a career in M&A, be diligent and keep banging on doors. Bankers, after all, are busy people. It's critical to be a hard worker and a team player. It also helps to be bright.
Job seekers should "find a firm where they really like the people with whom they'll work, and vice-versa," one banker told us. "Selecting a firm involves the age-old question of finding that right fit for you."
Skills and Qualities
- Appetite for hard work
- Analytical ability and statistical aptitude
- Ability to work well in a team environment
- Good communication skills and self-confidence
- Strong attention to detail