IB M&A Buy-Side Info
Hi all,
I am a college freshman with a strong desire to go into IB (can talk about that more if you guys want; I know lots of people give poor reasons for entering IB). I've been looking specifically at what areas of IB I would want to target with my networking and technical skills. I really have been interested in the buy-side m&a of IB, and I would love to hear more about the skills that are used there, the potential exist ops that it presents, as well as any advice that anyone has on getting into the industry. Thank you guys so much!
Generally, there is not a specific buyside team in banks. If you are referring to the Buy-side/investor rolls that's a different story.
I wouldn't say that there are not necessarily different skills that are used in a sell-side compared to the buyside at the analyst level. Others may disagree, but the buyside at the senior level really becomes more about justifying valuations and Due diligence rather than creating a story for an asset.
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You're getting your terminology a little mixed up! That's okay, because you're 18, and this stuff gets a little confusing.
Generally, buyside jobs refer to investor jobs. If you are a private equity shop that buys out companies, or some hedge fund that buys equities or other assets, you are on the buyside.
Generally, sellside jobs refer to salespeople jobs. Investment bankers are salespeople. They help their client companies sell equity and debt in themselves to investors on the buy side, like the aforementioned HFs and PE shops. They also help companies sell themselves, which is M&A, like you mentioned.
What I think you're referring to is being an IB advisor to the buyer in an M&A transaction. I actually struggled with this weird distinction, too, when I first started networking. Even though an acquirer's bankers are working for a buyer, they aren't really called buyside bankers that much. I've seen people say it, but like other people have mentioned, it's kinda awkward. I'll say this in one sentence: even if your client in an M&A transaction is a buyer, you, as a banker, are still working a sellside job.
If you want exposure to those kinds of advisory experiences, I'd shoot for jobs at top BBs and EBs, since the blue chip companies that do a lot of strategic acquisitions and the big PE funds that do a lot of LBOs tend to go for brand name advisors.
Maybe you should aim for corporate development?
Banking is sell side
M&A transactions can be divided into two types:
(1) Sell-side M&A - advising on the sale of a business
Key workstreams - identifying a list of potential buyers (both trade / strategic and PE buyers) and subsequently reaching out to them, the drafting of marketing materials on the business being sold of varying lengths (teaser - 2 to 10 pages, information memorandum - 50 to 150 pages, management presentation - 30 to 80 pages), building the underlying three financial statement model (that will underpin the financial forecasts for the business being sold), managing the due diligence process (running the virtual data room, answering queries from buyers), and various deal completion-type tasks (completion mechanisms, fund flows, etc.)
(2) Buy-side M&A advisory (advising a company / financial investor such as a PE fund on acquiring a business)
The scope of this work tends to be more varied. It can involve being mandated to find a list of potential acquisition targets based on buyer's criteria. It could also involve advising a buyer that already has an acquisition target in mind and is in a live auction process - in which case the work will typically revolve around advising on valuation, the financial impact of acquiring the target (if a strategic buyer), helping resolve key due diligence areas, exploring exit options further down the line (if relevant, i.e. a private equity buyer). A lot of buy-side work has the objective of freeing up time resource for the buyer, and providing an extra "blanket of security" for the buyer.
Most M&A advisors will undertake both sell-side and buy-side M&A advisory work, but not on the same deal. Sell-side M&A work has more certainty of completing - as you only need to find one buyer to provide an adequate valuation for the deal to complete. Buy-side M&A work is more of a sh*tshow as its highly likely that the buyer you are advising will not be the one that will actually complete the transaction (usually because they are an under-bidder, i.e. they did not deliver the highest bid). Sell-side M&A mandates tend to last a lot longer (3 to 9 months) than buy-side mandates (1 to 3 months). Most M&A advisors prefer to do sell-side work and some, particularly in the mid-market exclusively focus on this type of transaction.
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