M&A investment banking is sometimes said to provide “the most cognitively difficult work” and “the finest exit prospects.” These assertions raise a few questions. Is matching objects in a PowerPoint presentation ever an “intellectually hard endeavor,” for example?
However, there is another issue: most individuals who make these arguments are unaware that working on agreements is sometimes tedious and monotonous. Although there are certain advantages that deal room for M&A, the hype often outweighs the reality.
What is M&A Investment Banking?
Bankers in M&A investment banking assist firms on how to sell themselves to buyers, acquire smaller companies (targets), and divest or purchase certain divisions or assets from other companies.
Sell-side M&A deals and buy-side M&A deals are the two primary groups. You advise a corporation that wants to sell – either the entire company or just one division – in sell-side negotiations. You advise a firm that wants to buy another company, asset, or division on the buy-side. You don’t “advise” anybody as an analyst or associate; instead, you churn out Excel and PowerPoint documents, respond to information requests, and keep track of possible buyers and sellers. The experience varies between sell-side and buy-side transactions, as well as whether the transaction is focused or broad.
In focused deals, the buyer and seller are frequently already conversing, or a corporation wants to concentrate on a small number of potential buyers or sellers.
In dozens or hundreds of prospective acquisition targets, you present a firm and try to uncover anything that interests them in broad buy-side negotiations; in broad sell-side deals, you hold an “auction” where you pitch the company to (possibly) dozens of purchasers.
Instead, top bankers spend most of their time negotiating, while analysts and associates devote more time to Excel-based analysis and transaction presentations.
Broad agreements typically need additional procedures and research effort, which may include any of the following:
- Prospective buyers and sellers are identified, ranked, and presented.
- Educating and preparing the management team for the deal process and in-person meetings.
- writing the offer’s teaser, CIM, and management presentation, which are all utilized at different phases to pitch a firm in a sell-side deal.
- Process work is typically done less in targeted agreements (contacting and tracking buyers and sellers, responding to their requests, writing the teaser and CIM, etc.).
Why Can the M&A Groups at Different Banks Be So Distinctive?
Larger firms, such as bulge brackets and elite boutiques, are more likely to specialize in “targeted deals” with large public corporations. Many of these businesses have just a few viable buyers and sellers. As a result, you’ll spend significantly more time on the following tasks:
For each firm, this means creating a variety of operating cases and deal scenarios (e.g., alternative acquisition prices, cost synergies, stock/cash/debt mixes, and so on).
Reconciling figures, such as data in jumbled option tables, customer contracts, and “adjusted” financial statements.
These activities may seem entertaining at first, but after the 117th time you do them. Because you run the same studies in Excel and then re-run them with fresh firms or transaction terms, you seldom have time to explore an industry or company in depth.
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