MM vs Large Cap M&A

People tend to blowout their experience and state one is dramatically different than the other and it’s just not. Lot of bullshitters posting above. Especially at the junior level, it’s functionally very very similar. Further, people ignore how often large banks do mm deals or mm banks work on larger deals. Here are the main differences:

• Fewer buyers in large cap. Not that many people can shell out a $1B+ check. For something $400m, you could have a diverse group of acquirers. Historically in the mm firms also were more likely to be PE firms vs strategics. Again, going back to the how many can write a $1B check argument. Lots of PE firms in mm, so processes tend to be broader with even more narrow sales and it’s not uncommon to have 5-10 firms in the mix. Large cap there might really only be 3 firms that could make sense and write the check. This changes the dynamics of how you run the transaction and how you would position the company and articulate its value.
• More public companies means anti-trust and how a stock will perform are given consideration. In the mm, you still will go through antitrust documents like filing hsr etc, but you aren’t really afraid a transaction will be blocked. People are overblowing this because frankly this falls out of the banker’s role and gets more into the legal team and counsels job. As for the stock price reaction, again, out of the bankers wheelhouse really. Bankers are such atrocious investors and analysts of the public market, but they like to act like they are hedge fund analysts.
• Modeling—the modeling just isn’t that hard at any level given the number of references. “You actually learn to do math at a BB” is such a moronic analyst thing to say. Please tell me the complex calculus and statistics you did for a mega-merger? It’s all addition, subtraction, multiplication, and division. Yes it could get more involved in terms of number of tabs, or complexity when looking at debt and stock considerations, but it’s not rocket science. The things most people struggle with are understanding how statements connect and options which you can gather in PE or doing a funds flow. “Complex carve outs” and “intricate multi-segmented businesses” are so overblown on this forum. People act like it’s a completely different role rather than the reality that is closer to just modeling several businesses at the same time. 

In summary, it’s pretty similar. There are fewer buyers, additional considerations with public companies, and the transaction can involve more pieces than a mm company, but the overlap is close to 90%. The above posters try to inflate their self worth by making each deal at a BB sound like an an anti-trust prone carve out with extreme stock volitility. Even large mergers are often times much closer to just a straight buyout than something involving additional complex analysis.