Anyone interested in following the mergers and acquisitions career path should be aware from the outset: It’s not for amateurs.
While it may look from a distance like it’s all wheeling and dealing, spotting the potential for a deal and making millions on commission from closing it, the reality is actually quite a bit less glamorous.
Companies aren’t that easy to sell and can spend several years waiting for the right buyer to come along.
During this time, the investment bankers with the mandate for the sale will update the selling documents dozens of times, performing repetitive tasks such as refreshing company information, financial and the market outlook.
The team may not have heard of the company at the beginning of the project but it’s not an exaggeration to suggest that they’ll be more familiar with its workings than 95% of its employees by the time the company is sold.
Such is the repetitive nature of the work, combined with the fact that potential buyers can ask literally anything about the company.
We, at DealRoom, work specifically in M&A industry and collected as many useful information as possible to give you a full understanding of how to start a career in M&A and answer any related questions you may have.
Is working in Mergers and Acquisitions a good career?
Is mergers and acquisitions a good career? Why work in mergers and acquisitions?
Well.. none of this is intended to be negative about M&A careers.
A good M&A career path puts you at the nexus of finance and strategy unlike any other position. From very early on in your career in M&A you’re likely to be exposed to a level of seniority - and by extension, industry expertise - that most other roles take years to achieve.
It can also be highly lucrative, when executed well, particularly on the advisory side. Companies large and small rarely undertake M&A transactions on their own, instead hiring intermediaries to help with the process.
Smaller deals typically lead to fees of 10% to the intermediary, while larger deals - those running into the billions - can yield commissions of 3% for the intermediaries involved.
It’s also rewarding from an intellectual standpoint. M&A careers demand that people think strategically. It’s not just about closing transactions - it’s about finding the right companies at the right time in their business cycle, selling the opportunity, creating a financial structure that works for everyone and then making sure that the deal is a success even after the ink has dried on the contract.
If you want to know the typical day of someone in M&A, then just scroll down this article.
What M&A positions exist?
There are three broad categories of M&A positions:
- positions within industry,
- positions at investment banks and other intermediaries,
- positions at private equity companies,
- career at corporate development departments in big companies
In each case, there are different levels of seniority that begin with analyst and associate positions before moving upward into manager and director positions that are involved in negotiations and face-to-face contact with target companies.
In the first category, large industry players that conduct a number of transactions tend to have in-house M&A teams. These M&A roles usually demand that the people have some industry background.
For example, all of the largest technology firms have in-house M&A teams, and these teams all have good knowledge of emerging trends in the technology industry, so that they know an attractive proposition when they see one.
In the second category, intermediaries include all those companies that aren’t buying companies themselves, instead advising third parties on their mergers and acquisitions. These include investment banks, legal firms, strategy consulting companies, and brokerages.
Here, the position involves less industry expertise and more deal nous: intermediaries are usually industry agnostic, focusing on generating deals rather than any particular industry.
Finally, there are private equity companies and companies of this ilk (pension funds, growth funds, VC funds, family offices, etc.).
In a way, these positions are similar to the M&A roles in industry, with the caveat that the focus is financial rather than strategic. The ultimate aim is to sell (“exit”) the businesses after a few years of improving their financials. Thus, while industry knowledge can be an asset, financial expertise tends to be valued more highly.
What salary can I expect in M&A?
Needless to say, the salary you receive in M&A depends on the seniority of your position.
A further consideration are the deal bonuses: Intermediaries receive a success fee when transactions close and this is typically distributed among the team responsible for closing the transaction. That fee can be anywhere between 3% and 10% of the transaction, depending on its size.
Typical salaries in M&A as of Sept 2022 in the United States tend to be in the following ranges:
- M&A Analyst (entry position): $72,310 - $98,220
- M&A Associate: $110,277 - $152,183
- M&A Manager: $138,326 - $188,543
- M&A Director: $177,300 - $235,400
So, once entering, you can expect a good salary. The following are indicative figures taken from various grades at JP Morgan at their London office.
We should also notice that salaries can vary for mens and women. As this gender pay gap data shows that Four top lenders pay women median salaries 28.9-35.2% less than male colleagues.
How to get a job in mergers and acquisitions
Here’s the good news: there’s a route into working in mergers and acquisitions for most people.
While graduate programs at the investment banks will - inevitably - look for the brightest candidates from the best universities to fill their M&A roles, even they will be open to taking on people who come from non-traditional routes when they’ve shown themselves to be competent in M&A at some level.
This is also true for non- top-tier banks and blue-chip companies with in-house M&A; essentially, if you’ve got the ability to put together an attractive and convincing sales document for a business, it’s a very good start.
You don’t have to possess a CFA for the financials, but it does help to have at least some knowledge of the financial statements and how the business you’re selling has performed over the last 3-5 years.
Jobs always arise on LinkedIn. Set up a job notification under ‘M&A’ and you’re likely to be hit with at least a few jobs every day.
And even if they don’t end up hiring you, knowing that a company is expanding its M&A team lets you know that they’re on the lookout for transactions. This is where you have the chance to be proactive, make contact with someone within the firm, and who knows, further down the line, they hire you, having seen your ability at first hand.
The M&A career path or how to start a career in mergers and acquisitions
If all of this sounds of interest, we’ve outlined a general mergers and acquisitions career path below.
Keep in mind that mergers and acquisitions careers vary from company to company, but many of the skills that you acquire in one job will be quite transferable to others.
As important as your background are the set of skills. The following graph shows the most common skills on entering investment banking (on the left) and the most common on leaving (on the right).
Almost all M&A careers will involve at least some of the following components:
1. M&A analyst positions
Analyst positions in investment banks are keenly contested at both the entry stage and after you’ve started your trial period. You’ll need excellent marks in whatever you do (invariably you’ll be from a numerical background with engineering being an increasingly popular go-to for IB recruits), as well as being highly capable socially (so they can put you in front of clients).
The stories are legion at some investment banks about the lengths that analysts have to go to in their first years to achieve permanent positions, but thankfully, this unhealthy macho culture is largely a relic of the past.
Goldman Sachs, for example, stopped its 2-year analyst program in 2012, now only taking on permanent hires. And that means more investment in the individual.
The analyst position in M&A has one of the steepest learning curves, which, aside from the often attractive salary packages, makes it a highly rewarding career path. Even a brief period of just a couple of years at one of the most well-known investment banks can mean someone is much more in demand in the job market for the skills they’ve obtained.
These opportunities include but are not limited to:
- Strategy positions at companies (or consultancies)
- Private equity positions
- Fund/portfolio-related positions
2. M&A associate positions
Associate positions at investment banks are usually filled by one of two groups:
- Those that missed the cull/exodus of analysts after the first 12-18 months, and
- those who missed out on an analyst position when the graduate recruitment round was underway.
Btw we have described in details the investment banking career path here.
If the latter is the case, you’ll need to show some stellar and relevant work in the intervening period. Perhaps this was working for a boutique bank where you had lots of client-facing opportunities, for example.
That’s the next thing: This is where client facing begins in earnest.
There’s less of the powerpoint and financial model reworking (although that applies to every level of M&A to some extent) and more advising clients, meeting potential buyers (or target companies if you’re on the buy-side) and even some wining and dining, where the managers are kind enough to invite you along.
Moving out of investment banking for a moment, the associate position is usually the most junior that a company in industry will hire in M&A.
That is, it’s very unusual for a non-financial company to hire somebody in an analyst position - these companies don’t have the kind of transaction pipeline that requires a long hierarchical structure in the M&A department.
Usually an associate or two and a couple of managers doubling up on strategy tasks is enough.
Continuing on the industry theme - for anybody that hasn’t worked until now, this is a great jumping on point, with companies being far more open to atypical backgrounds working in M&A than investment banks.
As mentioned in a recent article on , in some complex or specialized industries, having a good grasp of the market and the competitive dynamics is more important than being an expert in Microsoft Excel.
3. M&A manager / managing director career
At investment banks, the - aside from the traditional role of overseeing the company’s operations - is above all, sales. Look through the prerequisites for any senior M&A position and something that occurs again and again is a ‘portfolio of clients’ - the CEOs and CFOs of companies you can call on a whim to discuss potential deals.
When appointments are made by investment banks and announced in the financial press, it often goes hand-in-hand with a mention of how they’re a deal-maker. Deal-making, or selling the services of the investment bank, is the alchemy of investment banks.
It’s still their biggest source of income, and brings in hundreds of millions of dollars every year. The ability to do it well goes back to why they’re so keen to test analysts’ social skills at the very beginning.
Some words about education: what are the best degrees for M&A
It will come as little surprise that the best degrees for M&A are the elite schools.
Look through the educational background of the employees at the most prestigious investment banks and there’s a common thread running through them all: Ivy League, Top-10 MBA Business Schools, and prestigious schools from other countries.
Also, the best universities and technology institutes in India and China are increasingly happy hunting grounds for the big players in M&A.
Specific M&A training courses
If you’d like to enter M&A without going back to college full-time, there are options available to you. A previous DealRoom article about provides an overview of some of the best courses around for those that want to gain specific M&A knowledge.
In summary, these are:
- M&A Science Academy Unlimited
- The LBS Mergers and Acquisitions Course
- IMAA International M&A Expert Program
- Corporate Finance Institute M&A Modelling Course
- CIMA Mergers and Acquisitions Masters Course
- Stanford Business Mergers and Acquisitions Course
- Mergers and Acquisitions at Harvard Business School
- Kellogg School of Business: Creating Value Through M&A
- INSEAD M&As and Corporate Strategy
- The M&A Council: On-site Training for M&A Teams
Finance (investment banking) is still a big draw among MBA graduates, typically attracting between 30% and 40% of the best business schools.
However, an MBA isn’t the only route into M&A. In private equity, for example, less than 10% of first-timers in the industry come direct from MBAs.
Finally: let's take a look at typical day of someone working in M&A
The day of someone working in M&A depends on i) how active their company is in M&A, and ii) how much progress they have made on closing individual transactions.
That is, if you are still at the deal origination phase, it’s likely that you’ll spend most of your day looking for suitable transactions and reading industry reports; if you’re just about to close a transaction, you’ll be up to your eyes in negotiations, due diligence and preparation for post merger integration.
That said, a “typical day” would probably include some of the following:
- Reaching out to the corporate development managers at potentially interesting target companies and/or investment bankers with good deal flow to establish those companies in the market which are for sale and of interest for potential acquisitions.
- Team meetings where deal progress is discussed - both for existing deals and deal origination. This could also involve members of the company’s strategy team, who will play a big influence on the company’s M&A ongoing M&A strategy.
- Due diligence activities on deals that your company has signed LOIs for.
- Document writing (particularly the case if you’re working as an intermediary on the sell-side), whereby you are required to constantly update the company’s information memorandum.
- Calls with clients (if you’re an investment banker) letting them know of potential interest in their company and who you’ve spoken to on their behalf.
Conclusion
If you’ve missed the cut for an analyst position at an investment bank, don’t worry - there are opportunities to get back involved at all stages of the career path.
There are more resources online than ever before which give the ins and outs of what goes on in what was once a very secretive industry.
Small boutique investment bankers are also usually reasonably willing to share some of their commission if you convince them you may have an interested buyer.
In 2020, the M&A career path has more paths leading onto it and off it than ever before.
