How is it to work at a small M&A advisory firm?
Hi all!
I am starting an internship at a small M&A advisory firm (1-10 mil€ deals, approx. 10 deals per year, 4 employees).
I would like to have some information and insights about that kind of firm (life, experience, salaries, exit opportunities, work-life balance, culture, and how it differs from other players).
Thanks!
NB: I have seen other topics on WSO about small M&A firms but none is really extensive.
Check linkedIn for people whose former company was that firm and see where they work. I’ve done this for a few small LMM M&A firms and their exits were to LMM VC and tech corp dev. Could be completely different for you but thats one way to look at exit opps
Unfortunately, it is a quite a young firm (5 years), and it has no alumni at this point.
For reference, I was a 2020 SA and now FT a relatively small M&A shop not in NYC: ~15 - 20 FTE's (5 senior bankers, 2 associates, 2 analysts, 3-4 SA's during the summer, rest support). Most of our deals fall into the $25 - $100 MM as we have minimum fees in place so we won't compete for any deals less than ~$10 MM.
An important note: Your experience is likely to be highly variable based upon the firm/MD's you work for. I can only speak to my experience.
- Experience: All depends on deal flow. When you are working on live deals you will absorb significantly more responsibility and be involved in most if not all aspects of the deal thus getting significant exposure/experience. You will also get significant exposure to how a process is managed at the senior level (not just the analyst grunt work). However, if deal flow is slow you will find yourself doing more prospecting/sales/marketing work, and less analysis/financial work.
Work-life balance: Again, this is heavily dependant on which firm you work at and how much deal flow there is. A typical week for me is 60 hrs (8am - 8pm) most weekends spent studying for FINRA exams. When there is significant deal flow you will be much busier. Ex. In August my banker landed three engagements in three weeks, I did not see a day off (including weekends) until mid-late September.
Salaries: Significantly below street. As it was explained to me small M&A shop's only source of revenue is from fees. BB banks have other sources of capital (Corporate & commercial banking, retail, DCM/ECM, S&T, etc.) so their analysts are more a fixed cost. Smaller firm's analysts are more of a variable cost, meaning your base should be lower but when deals are being closed you are likely to see more of the upside in comparison to a BB analyst. Again this may vary from firm to firm based on the view of your MD/firm.
Exit opportunities: Hate to say this again, but this will vary from firm to firm. My firm has a decent reputation for the niche we service so our analysts place well with MM PE and/or EB or BB associate roles.
Culture/How it differs from other players: Don't waste as much time doing stupid shit. Since we are staffed lean I rarely find myself doing work that isn't "revenue-producing". Meaning the MDs never have us build complex models that take all night and deliver no value. As I mentioned before, the work will likely feel more like a sales role than a finance role since 1. We are not invited to pitch on deals, most deals are sourced from prospecting/phone calls, and 2. there is only so much meaningful financial analysis you can do for companies of that size.
Hope that was helpful, happy to answer other questions if you have any.
Good post, having worked with some smaller intermediaries my gut feeling is that dealflow and strength of MDs is important. If you're doing $25-100M deals, thats LMM to MM size of companies. a $100M deal could be a $15-20M EBITDA businesses, which is decently sized. If the volume is high and the MDs are bringing in a lot of deals, you could get a good banking experience and likely either exit to a LMM PE shop or have enough experience to lateral up to a bigger banking gig.
OP, 1-10M deals are much smaller, and only 4 people means you're likely going to be working with really small businesses. Mom and pop firms, things you'd almost find on buybizsell and other random internet marketplace type of sites. Fees will be low and the processes will likely be pretty loosely run and without too much complex analysis or training in terms of modeling, deck building etc. I've seen the materials put together for these types of deals and the quality is generally pretty low, not the type of standards that you'd expect even from a no-name middle market advisor, much less a true MM or BB experience.
If you don't have any other offers, take it to say you're getting some experience, but I'd be looking to lateral pretty shortly after joining. There's nothing wrong with small, but it's going to limit your experience and your exit ops.
Great, thank you for your answer!
Overall, it seems like it is more enjoyable to work in such a firm than in a BB, haha!
I have worked on deals as small as $10M and for firms not much bigger than you describe while an intern and it is a mixed bag. Work life balance was typically better but there was constantly something due to the volume nature of the firm. Think of it this way, the universe of companies for a $1-10M deal is very broad compared to farther upstream in the middle market - so you could be in for a good amount of pitching.
Definitely varies I’m on my 3rd LMM firm and all three have been vastly different experiences.
I work for a LMM M&A Advisory firm. I love it. I make crazy good money. For me, I have a base of $70K signing bonus of $10K, and every deal that closes I get a chunk of that. This is my first year and I am projecting $180K total comp plus I get a ton of days off.. We pretty much stop working in December.
I work long hours tho and it is a grind, no big PE shop wants me. I'm cool with it because I like it here but some people get stuck here and hate it. I could maybe go to a lower-tier MM like Raymond James/Wells/Truist but nothing sexy. Few grinders have made the leap to a BB or top VC/PE but it's definitely an uphill battle.
This experience mirrors my own. Slightly below market base but ridiculous upside as I share in each deal. I'm projecting similar, COVID has not really had an effect on deal flow. I work extremely long hours when busy but no facetime culture so when we have nothing on I just work 9-5 or take the day off.
Exits are extremely limited, getting to PE basically relies on us closing a marquee deal and then me leveraging that experience to move to an MM or BB bank.
I am super interested to learn more about where you are at and your shop. Wasn't sure how many like me are out there. Could you tell me your geographic area?
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