Afternoon Folks,
Since I've been spending a lot of time answering questions, I've got one about an area that I am not familiar with. I have an interview coming up in the near future to hop over to a banking role. However this firm doesn't view themselves as being a traditional sell side investment bank. They do almost exclusively buy side advisory for strategic acquirers and place a premium on buy side understanding.
Since I've never worked on a buy side deal I have a few questions about how to shine. My goal isn't just to be able to know what's different between a buy side deal, but to be able to take it to the next level and ask questions that somebody wouldn't even know to ask unless you understand buy side deals.
Areas that I am hoping to gain insight in;
1) How does the emphasis on buy side deals impact your day to day work at a junior level?
2) What are the biggest things that you will need to pick up quickly in buy side deals, and how are these different from sell side deals?
3) Why would I want to work in a buy-side focused M&A firm? This one is particularly important because it will help show good fit (I have some idea already, but more information will help me communicate it better).
4) What personality attributes or skills can I demonstrate that will showcase me as being great for a buy side role?
Kudos to those of you all who take time to reply to this post!
I don't quite understand what this is. Is it a merchant banking type situation that also provides advisory services and co-invests? Or something like a boutique senior advisory along the lines of a BDT or Michael Klein?
Outside of that, the obvious thing is that the thinking would have to be much more inline with an investor. A sellside transaction is a bit more straightforward is you're just looking to maximize current or future proceeds (ie. with a share sale) whereas buyside you would need to worry more about integration and portfolio fit.
Not as a definitive answer, more like my 2 cents on buy-side advisory, drawing on experience from previous mandates... 1) Heavier focus on modelling. Sensitivity tables and merger models will be your best friends. Depending on your level (applies to senior analyst, associate more than anything), you will be the numbers guy, which means you better know every single number and the reason they have moved (slight exaggeration). It's the inverse of the "graphics designer with basic arithmetic skills". Appearance and formatting of your work will be less important than usability and functionality. 2) Understanding that the buyer is trading off certainty of making a winning bid with paying as little as possible. Finding non-material issues with the target that can shave off a few $ of the price will make your client love you. This could be the seller overstating the growth prospects in a certain geography or product line, exceptional/non-recurring FX impact, etc., that have no further impact on the attractiveness of the target, but can bring down the offer price. As opposed to the sell-side, you won't need to sell the company to your client, but rather help bring the price down as far as possible. 3) Do 'more meaningful' work with an actual impact as opposed to peddling companies to anyone willing to pay for them. Provide actual advice as opposed to anticipating what the client might want to you to tell them. 4) Critical thinking and the ability to not just question things, but to ask the right questions (maybe try not to sound as stilted and 'straight outta business school' as that...) There is certainly also a lot of emphasis on understanding your client's strategy, market dynamics, how the acquisition will impact the firm's growth prospects, e.g. 'step-change' vs bolt-on (excuse the business speak, I've slept on a Harvard Business Review...) and so on. It'd be great if you could share your experience from the interview!
@Attack_Chihuaha", this is a pretty long post, but I don't think anyone has ever asked or answered this on WSO, so I wanted to make sure to cover the gamut of it.
I am on the other side of the table- my firm has an IB that performs buy-side searches and buy-side advisory (they do sell-side too) on retainer. While in undergrad, I also interned at an IB that heavily focused on buy-side searches and advisory services. So, I think that I can help you, but you should provide some detail as to what exactly this firm does as there is a vast difference between what some of these buy-side IBs do. Feel free to PM me if you want to, but it would be great if you could post here so that others who need this advice can see it.
Anyway, you are going to have several different business models here. The boutique that I interned at in undergrad would charge $10,000 per month to conduct non-stop buy-side searches. We would spend hours every day pouring through industry trade websites and compiling long lists of potential targets. Most of our clients were lower MM PE shops that had a "generalist" portfolio (they only cared about certain EBITDA thresholds, a good management team, etc. but not industry). I really hope this does not describe your firm because spending hours and hours putting together these lists is not only mundane, but not a good way to build out your resume.
The more common business model that I see, and the one that the IB that we keep on retainer uses, is more so outsourced corporate development (they do provide sell-side services too). I hope that this describes your firm because this will give you some very solid experience. This boutique participates in internal corp dev pipeline meetings, reaches out to potential acquisition targets on our behalf when we want to remain anonymous, provides any modeling or M&A assistance we need (e.g. one of our people randomly quit a few months ago in the middle of a deal, which left us short-handed, so we outsourced some modeling to this boutique), advises us on ways into potential acquisition targets, etc. I don't know what their pay or hours are like, but I imagine the pay is well below street, but it seems like the hours are really good.
I hope that overview makes sense. Here are some answers to your questions:
The emphasis on buy-side deals will impact your day-to-day work depending on what type of firm that you're at. I imagine that you will be running some buy-side searches, manage a firm's M&A pipeline, organize diligence meetings/site visits, interact with the potential target's advisers, etc. The biggest impact will be a lack of marketing material preparation. You won't be preparing teasers and CIMs. I imagine you will be doing a fair share of modeling. I am sure that there are more significant differences.
To be an effective buy-side banker, you need to learn the industry of your client. You can somewhat get away with not doing so on the sell-side, especially if you're a generalist analyst, because as a junior employee your work consists mostly of tasks that are very similar, if not exactly the same, across industries (e.g. a TMT CIM and a transportation CIM are going to be pretty much the same). Also, because of the resources of large firms, if an M&A group needs advice or lack knowledge of a particular industry, they just bring in a coverage banker. On the buy-side, it's just you. You are being paid for your ability to find targets, find ways to get in touch with the right people at these targets, and then hopefully provide nuanced advice as the process moves along. You cannot do this without really knowing your client's industry.
Are you asking what the appropriate answer to this interview question is? If so, it just depends on which services your firm provides. If you are working at an industry-focused buy-side IB that provides outsourced corp dev functions, you might start your answer with your desire to focus on one industry for learning opportunities and because that can make you an expert in that one industry, as opposed to just knowing a little bit about many different industries ("a mile wide, but only an inch deep"). You then need to expand on why the buy-side instead of the sell-side, and I think touching on the amount of companies you interact with is the correct way to go about this. Since you will be conducting buy-side searches, you will at the very least briefly analyze many different potential acquisition targets. Compare this to a sell-side analyst who might run some comps, but spend the majority of his/her time focused on their one client. It's a lot easier to know the key players in an industry when you regularly run buy-side searches as opposed to just selling one client.
The same traits that make a good sell-side analyst will make a good buy-side analyst. I think that one area where you might want to focus on is taking initiative. The sell-side process is very vanilla and standard. You prepare a pitch, you win a client, you prepare a teaser and CIM, you send the teaser and an NDA around, you trade NDA changes, etc. Yes, there are some nuances, but the process itself is usually the same. On the buy-side, it never is. There are no steps to finding a potential acquisition target. You cannot just suggestion other public companies or "obvious" acquisition targets (e.g. good luck if all you ever do is suggest that Microsoft buys Apple or that Costco buys Walmart). What makes one of these buy-side IBs worth the money for firms is their ability to find hidden gems and principal to principal transactions. This almost always means finding businesses that are not currently for sale. You would be amazed at how many business owners when approached by an IB asking if they are for sale will respond with some effect of "hell no", go home and chat it over with their husband/wife, and then come back the next day and want to sell. Finding these business owners who are not considering selling their company but would be open to the idea when presented with it is very tough. Taking the initiative to attend trade shows, spend hours learning about an industry, keeping in contact with potential acquisition targets, etc. will separate you from many others.
I hope that helps. Let me know if you have any more questions.
Sb'd
Fucking fag
Cute, looks like I've got a stalker.
Fun fact Mr. "Prospective Monkey":
I got the offer from the interview that I made this thread about.
And I stand by my comment. Thanks to Tinder and some changes around the (for lack of a better term) "sexual marketplace" things have become somewhat more evened out since college. New York now has a favorable gender ratio and girls with even more loose morals than college did.
Dolores omnis qui est ut consequuntur. Consectetur tenetur eaque soluta sit reprehenderit.
Sed unde aliquam ducimus ipsam ipsa. Nam id tempore provident vel qui ipsa similique. Omnis recusandae libero nobis et.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...