Long hours, intense competition and high prestige

Because of its reputation as the glamorous side of investment banking, mergers & acquisitions (M&A) is one of the most competitive sectors to break into.

As the name suggests, M&A teams in investment banks advise client companies on mergers (where two companies join up as equals) and acquisitions (where one firm takes over part or all of another).

Big investment banks only get involved with transactions worth at least $100m. At the top end, the deals can be worth billions.

A career in M&A demands considerable commitment. M&A bankers advise their clients at stressful and critically important periods in a company’s lifecycle, so must make themselves available whenever the client needs them, even during their summer holiday or on Christmas Day.

Junior bankers work long hours and can expect to be busy assembling the required financial information and legal documentation late into the night, if the deal demands it.

“It’s somewhat of an art to reach an agreement on price and terms,” says Keith Magnus, chairman and head of UBS investment banking, Singapore & Malaysia. “The ability to understand very quickly the motivations of the different stakeholders and the softer issues involved in transactions is a critical skill which any M&A banker must possess.”

Key players

The top five places in the M&A revenue rankings are dominated by the large US investment banks, with only Credit Suisse challenging their dominance in 2011. However, European players like Deutsche Bank, UBS and Barclays also make the top 10.

Roles and career paths

There is a relatively straight route up the career ladder in M&A. You start out at analyst level for three years, move up to associate for three years, then vice president, director and managing director, although the job titles may vary depending on the bank. Within those roles you have a chance to focus on sectors such as consumer, financials, oil and gas, or media and telecommunications.

The more senior you get in M&A banking, the more you’ll deal face-to-face with clients. At the junior level you may attend client meetings with more senior bankers but mainly you’ll be focused on complex financial modelling and research to compile the ‘pitch book’ – the document the firm uses to outline its ideas on which companies a client should buy or sell to.

As an analyst, your key tasks will also include working on these client service presentations, largely for M&A deals, but occasionally for initial public offerings. A lot of this will involve building a financial model, valuing a company or benchmarking it against its peers.

It is only later that you step away from the number crunching. The key difference between an analyst and an associate is that you take on more responsibility for the transactions and projects.

Pay and bonuses

First-year analysts in M&A earn an average of £45k ($70k) base and a bonus of £25k-30k ($40k-47k), meaning first-year total comp should come in at approximately £70k-75k ($110k-117k), according to figures from UK recruiters The Cornell Partnership.

Skills sought

Given that you’ll be working on complex financial models for valuing companies, and piecing together presentations to clients, numerical and analytical skills are essential. Second languages are valued for working with overseas clients, as are stamina and attention to detail.

“Analytical skills and numerical aptitude are essential requirements. However, finding someone who is a good fit with our culture is just as important,” says Ravi Gupta, managing director, Rothschild’s Global

Financial Advisory division. “We seek people who are team players, who use sound judgement and initiative, and who have a real commitment to achieving excellent results.”

Many of an analyst’s duties are focused around financial modelling but, as you get more senior, these technical skills need to be combined with softer qualities. In particular, senior bankers will be dealing with people, each with their own aims and priorities, at very critical points in their company’s development.

“M&A deals, and in particular mergers of equals, often come to a pivotal point around social issues, assuming valuation considerations are agreed,” says UBS’s Magnus. “Who controls the company from a shareholding perspective, who the chairman is, who the CEO is, who the CFO is and the senior management team and board composition; very often a deal fails to get done when these positions can’t be agreed upon.”

Jana Hecker, vice president, Investment Banking Division at Goldman Sachs, agrees that client relationships are key: “We look for individuals who share our commitment to client service, who will excel in a dynamic environment and who can demonstrate a real enthusiasm for finance.”

Patrick Ramsey, co-head of Americas M&A at Bank of America Merrill Lynch, advises you to look at all the options available. “Invest your time in finding the specific area that best fits your capabilities and interests, then explore it and focus all your efforts there,” he says. “Talk to recent graduates in these positions to get a good sense of what you’re getting into and to confirm it’s the right move. Find the firm with the right cultural fit. Your key skills should be smarts, hard work and a passion for what you’re doing.”