M&A Pros and Cons

So I've talked to a couple of people in M&A groups and most of them enjoy it quite a bit. Some coverage group analysts and associates have said they really disliked it in the past.

What would you say are the main pros and cons of M&A and is the diligence process really the worst part of it?

Comments (23)

Apr 1, 2020 - 10:45am

Pro's - if you do not know what you want to do in the long run, an M&A team gives you great depth and flexibility in driving your own future. You gain sector experience, you gain sub-product experience (Public M&A, Private M&A (buy- and sell-side), Defense, Hostile, Carve-Outs, etc).
Modelling experience is good, and if you want a long-term career in banking, it really can be hard to trump. Due diligence is just a part of a deal, and just something that needs to get done. If you ever want a career in IBD / PE, you will need to do due diligence processes.
You have the flexibility to align yourself with you preferred sectors / sub-products over time and can typically get as involved as you wish with supporting the coverage effort (bank dependent). There's a reason why you don't often see M&A roles advertised externally; people do not leave as much and often firm hires the crem de la crem of sector talent internally.

Con's - firm dependent but there is a misconception of you being a process monkey (e.g. your comment on due diligence), and clearly some may argue that entering into a MF (which is sector aligned) could be "easier" if from a leading sector team in that space, however in my experience i have seen M&A bankers that want to move place very well, as well as into HFs (L/S Equity) / Risk Arb depending on the M&A sub-product experience.

All in all, a preference. If you love a sector, and can accept that when you become a VP in a sector team at a BB, your role / job will change, and your longevity in the industry will depend on your ability to go out and market yourself, your firm and your firms products, then you will make a good sector banker assuming you have the prerequisites.

If you enjoy doing transactions, being the expert at everything whilst also the expert at nothing as a result (at least in lower - mid levels), then M&A can be fascinating as it offers that breadth and depth.

  • 3
Apr 1, 2020 - 12:59pm

As you mention, becoming an expert at everything while also an expert at nothing...do you feel like most people in the industry have a good overview on all sectors after working in M&A?

And maybe have a more in-depth knowledge of only the sectors they're really interested in? Finally, I know when you're in a coverage group you can't trade securities within that industry, how does this work with M&A since you cover everything

Apr 1, 2020 - 1:34pm

If joining at Analyst level then you will certainly get exposure to 3/4/5 - often some sectors e.g. FIG / Real Estate may require less Private M&A Support (but still blue-book support), so you will get good experience before you start to align naturally.

All IBD need to go through internal protocols regarding checking which stocks are on insider lists, then going through your firms protocol / approval process before executing a trade, etc. I'd suggest you discuss this with whichever firm you join. There will be a process.

  • Analyst 1 in IB - Gen
Apr 2, 2020 - 4:59am

It also depends on the bank for securities, my bank at least for Europe doesn't allow you to trade any single name security, but ETFs/Funds are allowed

Apr 2, 2020 - 9:35am

I worked in an M&A coverage group. Yes, you would get the best and worst of both worlds. You do the M&A modeling, but you also work on BS coverage pitch books and meeting decks. Are you looking to move to the buy side? If you are, M&A is definitely the way to go - M&A coverage groups are also just as good. Sector coverage isn't bad per se, but M&A gives you a broad modeling skill set that most PE and HFs want. Go for sector coverage if you really love that sector.

  • Intern in IB - Ind
Apr 2, 2020 - 2:24pm

if you want to work in growth/venture for tech and really enjoy tech, would a tech coverage group be ideal, or would it still be better to try to work in a tech M&A group if the bank has one?

Apr 2, 2020 - 3:52pm

My ultimate question is
in an M&A Coverage team, can you be just as much of an industry expert as a pure coverage banker and just as much of a product expert as a pure M&A banker

Hello Wall Street, It’s Yours Truly.
If you don’t see it here, I didn’t say it.

Former Buffalo Bills Tailback

1973 NFL MVP

1968 Heisman Trophy Winner

5x All Pro

  • 1
Most Helpful
Apr 2, 2020 - 6:36pm

How long are you trying to stay in IB? Are you looking to move to the buyside? Or stay on as a banker?

If you're looking to become a long-term banker, don't become a product banker; you'll always be reliant on coverage guys to bring in deals for you. That may suit your personality better if you're interested in the analytical side of the equation more than the $$ and sourcing side.

Working on an M&A coverage team gives you insight into sector specific M&A...do you want to work in M&A? Or do you want to see other products? That'll dictate where you want to go. There is no "one is better than another". I enjoyed being in an M&A coverage group because I did both the M&A work as well as learned about my sector coverage, but it's really up to what you want. All of the senior bankers I worked for were ex-coverage guys and they knew their sectors just as well as pure coverage guys imo.

Apr 2, 2020 - 4:15am

Great comment. As a side note - and not meant to be snarky - it's crème de la crème. Just as a heads up in case you ever deal with a snobby French speaker.

  • 1
  • Intern in IB - Gen
Apr 2, 2020 - 11:51am

M&A groups at top banks (e.g. MS M&A) place absolutely lights out in PE recruiting due to extensive modeling experience and exposure to different industries. Great first step into IB/finance

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