Ask Professor Sridhar Arcot what he enjoys most about teaching on ESSEC’s Master in Finance programme and you might be surprised to hear the answer.
“I love the way the academic research that my colleagues and I do is directly applied in the classroom and is directly relevant to the jobs students do after they graduate and during their long-term careers,” says Professor Arcot, the academic director of the Master in Finance, which is taught in both Singapore and France.
“ESSEC has a strong research focus and that’s a cutting edge we have over other Master in Finance degrees – you have a different, more leadership-focused experience if you study with us.”
Professor Arcot says he and his fellow lecturers don’t “sit in a lab coming up with things that students don’t find useful when working in finance”.
“Instead we’re doing what we call ‘applied research’. We’re not working in an area like physics, where exact answers are possible, we’re thinking about current debates affecting people’s careers in the real world of financial services.”
Much of what Professor Arcot teaches in his mergers and acquisitions module (one of 21 core courses in the 15-month ESSEC degree) derives from his own research work.
“If I’ve researched the topical debates in my area and been published in academic journals, I can better ensure that the students are kept up to date,” he explains. “They will be the ones working in finance and actually facing these very issues. ESSEC’s research can help them make good market choices.”
What has Professor Arcot been looking into of late? “Private equity,” he says. “It’s a very important component of our Master in Finance because even if you’re not working in PE after you graduate, your clients or counterparties may well be.”
More specifically, he recently co-authored a paper on the increasing popularity of secondary buy-outs (SBOs), the sale of a portfolio company from one private equity firm to another. “We wanted to understand why so many PE funds choose to invest or exit this way – what are the market implications?”
“We found that many funds had unspent capital and therefore felt pressurised to do a secondary-buyout deal at almost any price. More importantly, our research shows that funds that invested under pressure often underperformed,” he adds. “So while secondary buy-outs may be on the rise, they are not always in the best interest of investors.”
The SBO paper illustrates how the research work of ESSEC’s academics gives its Master in Finance students new insights which they can use during the degree and in their jobs.
“When I teach from my research I encourage students to step into the shoes of the market participants and really understand their motivations. For example, I use the SBO paper to make them consider how they would react if they were managing a PE fund that was close to the end of its 10-year investment cycle. How would they think about exiting? What would motivate them?”
Importantly, students who receive research-based teaching at ESSEC are well placed to use what Professor Arcot refers to as “research-based thinking” throughout their careers.
“If you can approach problems with a research mindset and understand people’s motivations in the finance sector, it’s good for your long-term career and management ambitions. Research means asking tough questions and thinking about why markets work as they do – and that’s also the role of a senior leader,” he says.
Master in Finance students should not be too “short-sighted” and only think about the job they plan to do immediately after graduating, says Professor Arcot. “If you’re going into a junior M&A role, you’ll be doing spreadsheets most of the time. But don’t use the degree to help you with this kind of work – look to the future.”
“Remember that this is probably your final time in university education and in 10 years or less you’ll be in a leadership role and need leadership skills. That’s why at ESSEC we encourage students to not always take financial markets at face value. To succeed in the future in financial services you’ll have to think harder, dig deeper and research more.”