Starting a career in M&A can be a challenging opportunity, as well as a sacrifice for some finance students. In this article, we spoke to M&A juniors to better understand their experiences and to answer the question of why one should start a career in M&A. This article provides elements to guide those who have wondered whether they should break into M&A.
1. A stimulating work environment and a framework conducive to progress
This is one of the great advantages of investment banking. Whether it’s M&A, Leveraged Finance, Project Finance, ECM, DCM or Credit rating, you’ll be working with people who are smart and good at what they do. Working with brilliant managers and colleagues can only help you get ahead, especially at the beginning of your career.
Investment banks are also known for their rank-based organization and the hierarchical nature of their HR operations. Expectations at each rank are clearly defined. Depending on the institution, you may even have a mentor who follows and supports your progress.
Moreover, the biggest banks operate with large pools of analysts, unlike small M&A boutiques or the majority of private equity funds, which often have smaller staffs. You will be able to rediscover a “class spirit” similar to the one you had in school. We prefer to warn you that there will be a lot less parties.
The long hours spent working with the other analysts reinforce this team spirit. They often allow you to build strong bonds with your colleagues and to form solid friendships. There are even more bankers who name their colleagues as witnesses to their marriage.
2. The network in investment banking
You work with talented people, meet business leaders, transaction services consultants, investment funds, corporate lawyers, etc. All these meetings and exchanges are opportunities to strengthen your professional network.
This network can even boost your career in the short term. It is not uncommon for a junior to join the team of a client or a fund after working with the latter on a transaction.
3. Working in M&A to grow and progress quickly
This is the most common benefit of working in M&A when talking to juniors. And it follows naturally from the first. Working many hours with very talented people, in demanding strategic contexts that require great rigor in the deliverables. This is the investment banks’ recipe for maximizing the analysts’ progression curve.
Analysts will be challenged on their deliverables: smooth presentations, perfect pitches reports and models.
4. The salary in M&A
This subject cannot be ignored. When you know that some of the most prestigious banks and boutiques recruit their juniors right out of school for packages that exceed €100k, it is understandable that compensation is a source of motivation. It is also a sector where the remuneration evolution is very strong. Depending on performance, bonuses can also be as important as the annual fixed salary.
Although the argument of high remuneration is obviously not to be put forward in an interview, it is known to all. However, don’t forget that these high salaries are also a way to attract and retain young profiles. They will work long hours and sacrifice a significant part of their leisure and private life for their employer. It would be a shame to join M&A for the sole reason of compensation. Many analysts say so. It is very complicated to stay in this sector and to accept the heavy workload when the only motivation is the salary.
5. Working in M&A for the prestige
After the salary, we also had to talk about this point. In finance, everyone knows what working in M&A entails. Very long hours, a heavy workload, high work demands and a very competitive salary. If you add to this the high selectivity at entry and the complexity of the recruitment process, you can understand why this profession gets so much recognition.
Within the investment banking industry, many jobs have more or less the same characteristics as M&A (high demands, important progressions, strategic work context…). This is the case, for example, of Leveraged Finance, Project Finance and ECM (Equity Capital Market). Nevertheless, M&A remains the flagship branch of investment banking.
This reputation within and outside the investment bank makes M&A a path of excellence. Many analysts accept to spend 2 to 3 years in M&A to take advantage of the opportunities offered by the industry.
6. What are the missions of the M&A analyst?
Working in M&A allows you to participate in extremely strategic operations for companies. If you work in Large Cap (on the biggest deals) you are likely to find the deals you have worked on in the economic and financial press.
As you can see, the job of an M&A analyst offers many challenges. It allows you to work on key transactions, with interesting people who are good at what they do. But what about the analysts’ missions? What about their daily life?
It’s hardly a bed of roses. Alongside the missions with real added value: preparation of question lists, valuation, participation in the financial model, there are many more ungrateful tasks. The analyst is the small hand of a high value-added job, paid handsomely and therefore has to be impeccable. Thus, the analyst will have to make a lot of presentations, market research, and formatting adjustments on slides, take over numerous markups, etc.
All juniors go through this stage. They have to spend a few nights on low-value-added tasks before they can expect to do better in a second phase. Once the analyst has proven his or her rigor, reliability and commitment, he or she can usually move on to more interesting tasks, especially in financial modeling.
7. Working in M&A for opportunities
As mentioned earlier, M&A is widely known for its high demand. The rigor and workload required in M&A increase the employability of analysts, making their profiles attractive to recruiters in a wide range of fields, such as:
- Other investment banking services, including Leveraged Finance, Structured Finance, Syndicated Finance, Project Finance, and ECM
- Private Equity and Venture Capital
- M&A departments of large Corporates
- Finance departments of companies, ranging from startups to large-cap companies
- Strategy or finance consulting
- Asset management
- More operational positions in startups
Former M&A analysts have pursued diverse career paths, which is why some corporate finance students opt for 2 to 3 years in banking, using M&A as a springboard for their future careers.
Conclusion:
M&A offers numerous advantages and is highly regarded in the finance industry. It is an excellent choice for those interested in this profession or those still undecided about their career path. However, if you are interested in other areas such as private equity, strategy consulting or corporate finance, the experience gained during the first years in M&A is still valuable. It provides opportunities for professional growth, networking, and recognition. It is important to note that a career in M&A at a top bank or prestigious boutique demands significant sacrifices and may not be suitable for everyone. Other viable career options are available as well.
