Lifting the lid on the big 4 corporate finance teams – mergers & acquisitions

Navigating the various teams under the “Corporate Finance” (AKA Deals, Deals Advisory or Transaction Advisory) umbrella within Big 4 Chartered Accounting firms can be challenging.

Knowing what each of these teams can and can’t offer you in terms of your future Corporate Finance career and professional skills development might be the difference between securing your dream job or being overlooked time and time again.

In the third of a series of articles focusing on the various “Corporate Finance” teams within a Chartered Accounting firm, Numbers Executive endeavours to explain the pros and cons of working in the “Mergers & Acquisitions” line of service (AKA M&A or “M&A Advisory”).

Our insights are based entirely on Numbers Executive’s precedent experiences and we caveat that our views represent common outcomes we have seen. As with everything, there can be outliers..

The Elevator Pitch:

Broadly, Big 4 Mergers & Acquisitions teams provide advice to private companies (and in some cases public companies and government) that is mostly comprised of:

• Providing “sell-side” advice to a vendor (i.e. assisting a vendor to sell) – broadly by means of presenting / marketing an asset or company for sale and more specifically by means of sourcing buyers, managing enquiries from interested parties, project-managing workstreams (e.g. due diligence / tax / legal) and leading commercial negotiations (negotiate a final sale price etc.)
• Providing “buy-side” advice to an aquiror by means of target identification (i.e. finding assets to buy), valuation advice, reviewing marketing materials, coordinating due diligence and leading commercial negotiations
• Assisting with capital raising activities via sourcing of equity or in some cases debt (however debt advice is often handled by the sister “Debt Advisory” team)
• Providing other strategic advice to potential vendors and acquirors such as strategic reviews, tax structuring considerations and other legal advice pertaining to a transaction (note that much of this advice is referred to other specialist lines of service within the Big 4 family such as Tax, Management Consulting, Financial Modelling etc.).

What’s great about it:

• Exposure to a variety of clients across different sectors and ownership structures
• Direct exposure to CEO’s, CFO’s and key shareholders (including junior team members)
• Highly variable work given no two transactions are identical and often bring different challenges from a corporate finance standpoint
• Encourages the development of a “client coverage” mentality and rewards those who can identify potential synergies or other commercial benefits that may promote transactions between parties
• Develops a sound understanding of key valuation concepts and what drivers play a part in the determination of value
• Develops strong negotiation and selling skills and the ability to think on your feet
  Develops your ability to write compelling copy via the preparation of the many forms of marketing materials (pitch books, information memoranda, etc.)
• Builds your professional network across the corporate (clients) and professional services (lawyers / accountants / other advisors) landscape

What to be conscious of:

• Sell-side mandates are the most common transaction types as they are perceived as more likely to result in revenue for the team (than buy-side mandates). By nature, an Advisor representing sell-side will spend more time sourcing buyers / developing marketing materials / coordinating stakeholders than undertaking detailed financial analysis (financial modelling) that is applied to investment decision making.
• Many of the deals (but not all) are for privately owned companies in the mid-market space. As an adviser, these mandates can provide a greater sense of ownership over the whole deal, however the technical corporate finance elements can be more simplistic (e.g. lower exposure to public markets issues / more simplistic valuations / simpler capital and tax structures) – meaning you do not often get to see things from a buyer / investor perspective
• Often specialist advisory work such as strategic roadmaps, tax structuring and debt raisings will be referred to sister teams within the Big 4 Corp. Finance brand such a Consulting, Tax, Debt, Financial Modelling or Debt Advisory teams.

Most common future employment outcomes (with only this skillset):

• M&A teams within Investment Banks or Independent Advisers (likely at Analyst or potentially Associate level)
• Corporate Development / Business Development / Group M&A
• Alternative Investors such as Private Equity firms – likely those with a focus on growth investing / the mid-market.

Our advice to M&A professionals wanting to move into Investment Banking, Corporate Development or Private Equity

M&A teams are highly sought-after destinations within Big 4 Chartered accounting firms and for many perceived as the darling of the Big 4 Corporate Finance teams. They are the obvious feeder teams for corporate finance professionals wanting to move into an Investment Bank, Specialist M&A Advisor or Private Equity Investor and will provide a flavour of what to expect.

In our experience, candidates who are able to couple their M&A experience with time in a technically focused team such as Financial Modelling or Valuations tend to fare best when it comes to hitting the ground running in an investment bank (ground-up financial model builds etc.)

Further studies such as the CFA designation or a Master of Applied Finance will demonstrate your technical capability – whilst not essential are always useful.

Short courses such as Wall Street Prep or Training the Street might assist in providing exposure to the broader financial analysis undertaken in an Investment Bank.

Tagged: Mergers, M&A, Mergers and Acquisitions