Sell-side M&A vs. Buy-side M&A
Will you M&A bankers out there shed some light on the differences? Some pros and cons will do. Please focus on the experience of an incoming analyst. Of course, specific details are greatly appreciated. Thanks all.
Work in buy side advisory vs. sell side investment banking?
Experiences for bankers on the buy side and on the sell side can be quite different. For clarity, a buy side bank represents the buyer in a given transaction and a sell side banking team represents the company that is selling itself or a given asset.
Generally speaking, buy side processes involve more modeling and more technical analysis focused on structure and determining the price of an asset purchase. A sell side process involves working with a company's management team to put together promotional materials, handle the bidding process, and handle items such as the virtual dataroom.
Sellside gives you all the fundamentals wrt process. Buyside gives you the modeling/valuation skills you can discuss in interviews (especially sponsor buyside, but that's rare). If you get to work on 1-2 sellsides and 1-2 buyside towards middle of your first year, you should be pretty set for interviews.
While the common consensus says that buy side processes are more educational and beneficial to analysts, user @ex-banker", a retired investment banker, shared a different opinion:
As an analyst, you learn more and get a better experience on a typical sell-side. It's a longer process and you do a lot more work. You also get much more exposure to your client (often spending significant time at your client's site especially at the beginning of a deal). Though once you've done a few sell-sides, they can get boring as the processes are usually the same.The other advantage of sell-side is that they have a much higher chance of closing (1 seller, many buyers). While that's not going to affect your bonus as an analyst, it's nice to work on deals that close (helps with exit opportunities too). It's not to say you can't learn a lot on buy-side too as you'll do valuation and modeling and help with due diligence but a lot of buy-side is just acting as a conduit of information between your client and the sell-side advisor.
Both sell-side and buy-side M&A require a lot of tedious administrative work (setting up conference calls, meetings) from the analyst but sell-side has a higher ratio of real work.
You can read more about this topic on a seperate thread on Wall Street Oasis.
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when you charge your fee based on a % of the transaction, sellside is advantageous because you are able to boost your fee by negotiating the highest bid. buyside you are engaged to help negotiate the lowest price, which results in a lower fee.
sellside you will have to write a memo on the company used to give to potential buyers. buyside will not require this.
i have found that companies are typically more willing to speak to someone who is representing a buyer than someone representing a seller.
Doesn't that create an inherent conflict of interest for buyside advisors?
as an analyst, you learn more and get a better experience on a typical sell-side. it's a longer process and you do a lot more work. you also get much more exposure to your client (often spending significant time at your client's site especially at the beginning of a deal). though once you've done a few sell-sides, they can get boring as the processes are usually the same. the other advantage of sell-side is that they have a much higher chance of closing (1 seller, many buyers). while that's not going to affect your bonus as an analyst, it's nice to work on deals that close (helps with exit opportunities too). it's not to say you can't learn a lot on buy-side too as you'll do valuation and modeling and help with due diligence. but a lot of buy-side is just acting as a conduit of information between your client and the sell-side advisor. both sell-side and buy-side M&A require a lot of tedious administrative work (setting up conference calls, meetings) from the analyst but sell-side has a higher ratio of real work.
I've heard the opposite. Though it's obviously true that a sell-side assignment is more likely to close, I've heard you learn a lot more from a buy side assignments -- its where you learn the most about modeling/due diligence which is key for exit opps.
thanks for your comments. Can someone also talk a little bit about the nature of M&A transactions at the top bb's. GS, MS, ML, LB, Citi, BS, CS, UBS, etc.
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buyside
sellside is a lot of process management. However, if you have not worked on a couple of sellside deals, your experience rmains incomplete
sellside gives you all the fundamentals wrt process
buyside gives you the modeling/valuation skills you can discuss in interviews (especially sponsor buyside, but that's rare)
if you get to work on 1-2 sellsides and 1-2 buyside towards middle of your first year, you should be pretty set for interviews.
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