Yoel Zaoui knows a thing or two about M&A. Not only did he previously head up the global M&A team at Goldman Sachs, but – together with his brother Michael, who lead Morgan Stanley’s European M&A division – runs boutique Zaoui & Co, which squeezed into the top 20 for European M&A deals for the second year running.
Zaoui & Co only has six employees in London registered on the Financial Conduct Authority. It doesn’t hire graduates – although it’s rumoured to run a long-term internship – but Yoel Zaoui still imparted his pearls of wisdom on working in M&A to students at the London School of Economics Alternative Investments Conference this week. This is what you need to know.
It’s no secret that the life of a junior investment banker is brutal, no matter what provisions banks have put in place to reduce working hours. If you’re clocking 80 hours a week for at least the first three years of your career you have to do it because you’re interested in the subject, not because you’re chasing money or status.
“We do it every day, every night and often through the weekend,” said Zaoui.
Just because times are good now, doesn’t mean that you’ll be in favour throughout your career. M&A is cyclical.
“Healthcare is big now. Ten years’ ago people were saying that large pharmaceutical companies were too big and not efficient, then it came back,” he said.
Investment banking demands long hours, it involves working long into the night to solve complex issues, or at least provide the numbers behind solving those complex issues. It’s definitely not 9-to-5, nor is it particularly stable when you consider how swiftly banks swing the axe when times are bad.
“Choose M&A as a career if you are looking for a lot of variety and a lot of exposure to different situations and you provide resolutions to complicated problems,” he said. “It’s a lot of work on a hectic schedule. If you want a steady job, it’s not for you, but if you want project management where you deal with a bit of a crisis and it’s up and down, it’s more for you.”
The learning curve for junior investment bankers is notoriously steep, but this doesn’t mean that you have the right stuff to start originating deals until you’ve had a lot of experience.
“What matters is experience and judgement,” said Zaoui. “If you have experience but not good judgement, it’s not very helpful. If you have good judgement, experience will make you a better banker. You become better the more deals you make – it’s like fine wine, it helps to mature.”
Zaoui & Co only does M&A work, and Zaoui thinks this is a good thing (although you could argue that he would say that). Bigger boutiques like Perella Weinberg or Evercore combine M&A with restructuring work, and the bulge bracket banks rely on their huge trading arms for bigger revenues, even if most are currently struggling in this area.
“I had no idea whether I was going to like M&A before I started,” said Zaoui. “You should know this now, bit it’s also important to choose a place where M&A is important to the business, not a secondary consideration or an affiliate of some other things. You will then work on a strong deal flow and good teams where you’ll work on interesting stuff.”