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What is M&A and what do M&A analysts do?

  • M&A jobs are about working with clients on deals to buy and sell companies.
  • M&A juniors – ‘analysts’ – work on Excel models to help value companies involved in deals.
  • M&A juniors put together ‘pitchbooks’ in PowerPoint to help senior bankers win a role advising on deals.
  • M&A jobs are well paid: $110k salaries in year one are considered typical.
  • M&A jobs can involve grueling hours. M&A juniors complain of 100 hour weeks.
  • Two years in M&A can leave you well-positioned for the future, with opportunities available in private equity, hedge funds and elsewhere.

What do M&A advisory jobs involve?

A job working in mergers and acquisitions (M&A) is one of the most sought-after and high-profile roles in investment banking. Senior M&A bankers travel the world and advise on the world’s biggest and most complex “deals”, reshaping entire industries. 

M&A bankers are professional advisors. They operate at the highest levels, working with large global companies (or “corporates”, as they’re known in banking), advising chief executives how best to position their organizations for the future. Unlike management consultants, who help companies determine and implement the best strategy without necessarily changing the company’s component parts, M&A bankers drive strategy through structural change. They encourage the companies they’re working with (clients) to join together with other companies as equals (a merger), to buy and control a smaller company or part of a company (an acquisition), or to sell part of their own operations (a disposal). 

Mergers, acquisitions, and disposals happen for different strategic reasons. For example, a client may decide to merge with a rival operating in the same business area in order to increase its market share. This is known as a horizontal merger. Alternatively, a client may decide to acquire one of the companies that supplies the components necessary to fabricate its product. This is a vertical merger. There are also conglomerate mergers, when a company merges with or acquires a firm operating in a totally different market. And there are congeneric mergers, which take place when companies are in the same industry but offer different products. Conglomerate mergers have the advantage of allowing clients to enter completely different markets. Congeneric mergers bring advantages like established distribution channels, or whole new product lines.

Globally, the top three banks in M&A are Goldman Sachs, JPMorgan, and Morgan Stanley, as shown in the chart above. These are the banks that work on the biggest and the most complex deals, often involving buyers and sellers in different countries. But there are a number of other big U.S. and European banks that are also active in M&A, and many also lend the money to finance the deals.

While the biggest, multi-billion-dollar deals grab the headlines, the majority of deals are below $500m in size, and there are a number of so-called mid-market M&A firms which earn good money advising on these deals. There is also a large number of so-called boutiques, which are often independent, privately-owned firms run by a small number of senior M&A bankers who’ve left big banks to set up on their own.

Boutiques are typically pure advisory houses – unlike banks, they don’t actually provide the financing for deals themselves. Some of the largest so-called “elite boutiques” are publicly listed. The best-known large boutiques include Evercore, Rothschild, Moelis & Co, Lazard, Centerview Partners, and PJT Partners and Perella Weinberg Partners. 

The top M&A bankers are known as “rainmakers” for their ability to land big deals, but beneath the glamour the hours are long. Junior bankers have to spend years learning their trade before they can generate their own deals.

What does an M&A analyst actually do?

M&A analysts are the lowest rung in the banking hierarchy. Working as an analyst in an M&A division means being flexible because you can work on multiple projects at any point in time. You will be working on live deals and pitching new ones. When you’re working on a live deal, you’ll be involved in deal execution or helping a client buy or sell an asset, called buy-side or sell-side mandates. When you’re pitching, you’ll be preparing documents for more senior bankers to pitch to clients as they try to persuade clients to do new deals.  

Typically, an M&A analyst will be responsible for the financial analysis that underpins an M&A deal. This includes building a financial model, running the valuation and financial impact analysis, and preparing materials to present this analysis to the client. Very occasionally, an M&A analyst will also be asked to present this analysis to the client. Sometimes they will also be the point of contact for any questions or requests from the client relating to the analysis.  

“Day-to-day life as an M&A analyst largely depends on the deals you are working on,” says the head of UK mergers and acquisitions at one European bank. “Broadly speaking, mornings and early afternoons involve client interaction, status and/or diligence calls and discussions to agree on the workstreams the deal team should focus on as well as next steps. By the afternoon or evening, meetings are less frequent, and you can focus on progressing on the deliverables, which can range from excel modelling to preparation of marketing materials.”

How hard do you work in an M&A job these days?

In the past few years, the arduous nature of work in some M&A teams has become apparent. When deals boomed after the COVID pandemic, some junior bankers at Goldman Sachs complained that they were working more than 100 hours a week and were on the verge of collapse. M&A analysts at other banks voiced similar complaints and the banking industry responded by increasing junior bankers’ salaries and making sure juniors get some time off at weekends.

In 2024, however, long hours are still common. 75 hours a week are not unusual at big banks – especially American ones – and boutiques can regularly reach 85-hour work weeks on average. When Leo Lukenas, a 35-year-old Bank of America associate died of a coronary artery thrombus earlier this year, there were concerns that overwork and alleged 120-hour weeks may have contributed. Bank of America said Lukenas hadn't worked 120 hour weeks, but a recruiter said Lukenas had been looking for a new job as his working hours were excessive.

Why do junior M&A bankers work so hard? M&A is a fast-paced job and juniors will often work on multiple deals. Deal execution tends to be unpredictable by nature: it’s a live situation and a client-driven activity. The work of pitching clients who might participate in M&A deals tends to be more predictable, but senior bankers will often ask juniors to make changes to the PowerPoint presentations recommending the deals late at night. 

Nonetheless, hours aren't always extreme. “Working full weekends and very late nights may occasionally happen around a particular deal, but these hours are not the norm,” says the M&A head.

There are upsides. One Morgan Stanley banker told us that “M&A analysts have the opportunity to manage their own time and as long as the work gets delivered to a high standard you have the freedom to fit the job around your personal commitments.”

What’s your career path in M&A?

One of the benefits of a career in M&A is that there’s regular and steady progression and a clear promotion path from analyst, to associate, to Vice President (VP), to director, and to Managing Director (MD), although exact titles vary between different banks. The time it takes to reach the top rung varies, but as a very rough rule of thumb, it’s around 15 years - if you get there at all.

“Meritocracy is key to this path, and we are passionate about giving our people the career opportunities to best realize their potential,” says Joe Hannon, head of UK mergers & acquisitions for UBS.

As your M&A career develops, your job becomes increasingly client-facing. The role evolves from being technical and analysis-driven to becoming strategic and advice-driven. 

M&A jobs offer a wide variety of exit options. Many graduates stay at banks for their two-year M&A analyst training program and then leave (if not even sooner) for jobs in private equity, hedge funds, corporate development teams in large companies, or even consulting firms. After completing an analyst training program, it was historically the case that people left to study a top MBA. Today, though, it’s more common to leave for another job or to stay and become an associate.

Which skills do you need for a career in M&A?

If you want to work in M&A, you’ll need to be able to work autonomously. A member of the global M&A team at Morgan Stanley said: “M&A analysts are expected to get up the curve in terms of financial analysis and technical skills in a short period of time, and the role also requires a degree of independent and proactive work (for example reading broker notes) to stay current on the market environment.” 

Alongside independence, proactivity, and having a desire to learn, M&A analysts need to be confident with numbers and have a quantitative mindset. They also need to have good people skills and to be able to communicate and interact with people confidently. Ultimately this is a client-facing job, and clients look to M&A bankers to provide (good) judgement and advice. 

Good analytical skills are essential along with a strong work ethic and a good attitude. “A good banker needs to be committed to the job and the deals they are working on,” says Hannon, who also says a good attitude is vital. “It is essential to maintain a positive attitude as you are constantly interacting with others; a bad attitude could be detrimental to the whole team.” Hannon also says a sense of humor is also essential, although that probably won’t be enough on its own.

Education and qualifications for M&A

The fierce competition for M&A roles means that you, as an applicant, have to maximise your chances of getting into an internship. That means, in all likelihood, forgoing your dream English Literature degree for something more analytical such as finance, or a STEM subject. 

A brief look at recent recruits in Goldman Sachs' M&A advisory team suggests the most popular degree subjects for junior M&A bankers are economics, finance and business management. At JPMorgan, they include much the same thing. Some of the off-piste degree subjects include philosophy and foreign languages.  

How else can you embellish your CV? If you’re in the UK, you might want to try the Certificate in Corporate Finance offered by the Chartered Institute for Securities and Investment (CISI). The Financial Modeling & Valuation Analyst (FMVA) qualification, offered by the Corporate Finance Institute, could also help you out. 

You may also want to study for the exams run by the CFA Institute. Historically, the three CFA exams, which lead to a CFA Charter, were used by people working in research jobs and the asset management industry. In the past few decades, the CFA has also become much more popular in areas like M&A, with junior bankers and students often studying for the CFA Level 1 qualification to differentiate their CVs, successfully or not. 

The other key qualification for achieving an M&A job has historically been a top MBA. MBA qualifications are usually open to people with a few years' experience at work. Historically, junior bankers would spend two years as an analyst before leaving to complete an MBA and then returning to work as an associate, but this process has changed and MBAs are no longer mandatory. Even so, MBAs can still be a way to enter an M&A job mid-career or to swap into a top tier bank.

Salaries and bonuses in M&A

M&A jobs pay large salaries and bonuses. Following complaints about working conditions, banks are now offering first year analysts a base salary of around $110k (£86k) before bonuses. Salaries increase as you rise through the ranks. Three or four years out of university, first year associates are typically earning around $175k (£137k) to $200k (£157k), while directors (about eight years in) can earn a basic salary of $300k in the US. Managing Director pay is more varied and depends on the firm in question, but a salary of around $500k is considered the standard.

When you work in M&A however, your pay isn’t just about your salary – your compensation also includes a sizable bonus. For M&A bankers the size of the bonus depends strongly on fees paid to the bank when the client it is advising completes an M&A transaction. Fees vary depending on the size and complexity of the deal, but a rule of thumb is that fees equate to between 0.5% and 1% of the value of the transaction. 

When the proportion of the fee allocated to the bonus pool is shared among the team that worked on the deal, the MD who originated or won the deal earns the most. Bonuses at most banks are paid predominantly in shares, with a smaller cash element. Bonuses can be 80% of your salary as an analyst and are even greater than your salary as you become more senior – although it’s worth noting that it’s a tough market at the moment, with 2023’s bonuses flat on an already weak 2022, although 2024’s are likely to increase if M&A activity picks up as expected.

Pay is typically highest in the most prestigious M&A boutiques like Centerview, Evercore, PJT, and PWP, followed by major US banks such as Goldman Sachs and JPMorgan, and lowest at mid-market firms.

The eFinancialCareers salary and bonus survey suggests that a few years into your career as an M&A banker, you can expect to earn over $220k in combined salaries and bonuses as an associate.

 

With additional material from Zeno Toulon.

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AUTHORDavid Rothnie Insider Comment

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