Financial Services Career Path

Financial Services Career Path – It’s time for new M&A ideas to blossom, register for the M&A Science Spring Meeting on May 19th!

Kison Patel is the founder and CEO of Chicago-based due diligence software, which uses Agile principles to innovate and modernize the financial industry. A former corporate M&A advisor with more than a decade of experience, Kison developed his practice after witnessing first-hand many deep, industry-wide structural problems and inefficiencies.

Financial Services Career Path

Anyone interested in an M&A career path should know from the start: it’s for non-professionals.

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While from a distance it may look like everything is spinning and trading, seeing the potential of the deal and earning millions in commissions from the deal, the reality is actually a little less glamorous.

Businesses are not that easy to sell and can spend several years waiting for the right buyer.

During this time, the investment bankers authorized to sell update the sales documents dozens of times and perform repetitive tasks such as: B. Updating the company’s information, financial and market outlook.

The team may not have heard of the company when the project starts, but it is not a stretch to believe that by the time the company is sold, they will be more familiar with how it works than 95% of the employees.

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This is the repetitive nature of the work combined with the fact that potential buyers can ask anything about the company.

At , we specialize in M&A and have gathered as much useful information as possible to give you a comprehensive understanding of how to start a career in M&A and answer any questions you may have.

A good M&A career path, like no other position, will be at the intersection of finance and strategy. Very early in your M&A career, you’ll likely have the kind of seniority, and therefore industry experience, that many other roles take years to achieve.

It can also be very profitable if done well, especially on the advisory side. Companies large and small rarely complete M&A deals alone, instead hiring intermediaries to assist them in the process.

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For smaller deals, the agent typically pays 10% in fees, while for larger deals in the billions, participating agents can bring in 3% commission.

It’s also worth it intellectually. A career in M&A requires strategic thinking. It’s not just about closing deals, it’s about finding the right companies at the right time in the business cycle, selling the opportunity, creating a financial structure that works for everyone, and ensuring the deal succeeds even after the ink is dry. on the contract.

If you want to know a typical day of M&A for a person, just scroll down this article.

In each case, there are different levels of seniority, starting with analyst and associate positions, and then progressing to executive and director positions involving negotiations and personal contact with target companies.

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In the first category, large industry players who do a variety of transactions typically have in-house M&A teams. These M&A roles typically require employees to have some industry background.

For example, all major tech companies have in-house M&A teams, and all of these teams are well-versed in emerging trends in the tech industry, so they see an attractive proposition.

The second category of intermediaries includes all those companies that do not buy companies themselves, but advise third parties on mergers and acquisitions. These include investment banks, law firms, strategy consulting firms and brokers.

This position requires less industry experience and more deals: Agents are typically industry agnostic and focus on deal making rather than a specific industry.

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Finally, there are private equity firms and these types of firms (pension funds, growth funds, venture capital funds, family offices, etc.).

In some ways, these positions are similar to industry M&A roles with the caveat that the focus is financial rather than strategic. The ultimate goal is to sell (“exit”) the companies after several years of improved financial condition. So, while industry knowledge can be an advantage, financial knowledge is generally valued higher.

Another factor is deal bonuses: agents receive a success fee when deals are closed, which is usually split between the team responsible for closing the deal. This fee can vary from 3% to 10% of the transaction, depending on the size.

Typical M&A salaries (as of September 2022) in the United States typically fall into the following ranges:

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So you can expect a good salary once you join. The following are indicative figures taken from various classes at JP Morgan in their London office.

We should also pay attention to the fact that the salaries of men and women may differ. As this gender pay gap data shows, the top four lenders pay women 28.9-35.2% less than their male peers.

While investment banking graduate programs will inevitably seek top candidates from top universities for M&A roles, even they will be open to hiring people from non-traditional paths if they prove to be a good fit and have some M&A competency.

This also applies to non-top tier banks and companies with internal mergers and acquisitions; Basically, being able to create a compelling and engaging sales document for your company is a very good start.

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You don’t need a CFA to get into finance, but it helps to know at least a little about financial statements and how the business you’re selling has performed over the last 3-5 years.

Jobs are always created on LinkedIn. Set a job alert based on M&A and you’ll likely see at least a few jobs each day.

And even if they don’t hire you, knowing that the company is expanding their M&A team can tell you that they’re looking for deals. Here is your chance to take the initiative, connect with someone at the company and who knows, they may hire you later after seeing your skills first hand.

Remember that M&A careers vary from company to company, but many of the skills you learn in one job are quite transferable to another.

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Skills are just as important as your education. The chart below shows the most common skills for entry into investment banking (left) and the most common exit (right).

Analyst positions in investment banks are hotly contested both during the onboarding phase and after the trial period begins. You need excellent grades in everything you do (you always have a calculus background and engineering is becoming an increasingly popular choice for IBs) and you also need to be very socially competent (so they can become a leader for their clients). ).

Some investment banks abound with tales of the struggles analysts must endure in their early years to gain tenure, but thankfully that unhealthy macho culture is largely a relic of the past.

For example, Goldman Sachs in 2012 completed a two-year analyst program and is hiring for permanent positions only. And this means more investment in the person.

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The M&A analyst position has one of the steepest learning curves, making it an extremely rewarding career path with often attractive salary packages. Even a short stint of just a few years at one of the most famous investment banks can mean that someone is much more in demand in the job market because of the skills they have acquired.

If the latter, you have to show excellent and relevant work in the meantime. Maybe it was working at a boutique bank where you had a lot of opportunities for clients, for example.

Less PowerPoint and financial model review (although this applies to any level of M&A to some extent) and more client consultations, meetings with potential buyers (or target companies if you’re on the buy side), and even food and drink. where managers kindly invite.

When you step away from investment banking for a while, an associate position is usually a junior position that a firm will hire in M&A.

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Also, it’s very unusual for a non-financial company to hire someone in an analyst role – these companies don’t have the kind of deal pipeline that requires a long hierarchical structure in the M&A department.

Continuing on the industry theme, for those who haven’t worked before, this is a great jumping on point, as firms are much more open to atypical circumstances working in M&A than investment banks.

As mentioned in a recent article on working in mergers and acquisitions, in some complex or specialized industries, a good understanding of the market and competitive dynamics is more important than being an expert in Microsoft Excel.

In investment banks, in addition to the traditional role of overseeing business operations, the role of the M&A manager is primarily to:

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