How to Become an M&A Analyst

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M&A careers are exclusive and competitive. M&A involves buying, selling, merging, and restructuring companies in an undisclosed manner, usually until the deal is closed. Many people struggle to land an M&A role because they don’t know where to start. After all, there is a very limited amount of colleges with dedicated M&A programs.

An M&A analyst is where most people begin their careers. It's a huge part of the M&A team that is responsible for researching prospective target companies, analyzing competition and market trends, and completing due diligence during an acquisition.?

What does an M&A Analyst do?

Let's first understand the scope of the role. There are two main types of M&A analysts, buy-side analysts and sell-side analysts. Buy-side analysts are the ones who search for companies that are appropriate targets for an acquisition, while sell-side analysts pitch companies to potential buyers. Whatever side an analyst is on, the role comprises of a few major tasks including research and reporting.

Research

A primary responsibility of an M&A analyst is to conduct research and analysis on their client's potential targets, competitors, and growth opportunities. They do most of the preliminary legwork for potential deals, such as approaching target companies and collecting vast amounts of data and information.

Reporting

Another responsibility of an M&A analyst is to create valuation models of target companies to help upper management make decisions on a deal. This is from the preliminary data gathered during their research.?

An M&A analyst also prepares customized presentations for business executive teams.?

Review of Financial Statements

One of the essential tasks of an M&A analyst is to perform a feasibility assessment of the transaction and assess the financial position of the company to be acquired. During the diligence process, analysts help review the target company's financial statements.?

What are the Requirements of an M&A Analyst?

Just like any job, there are specific requirements needed for this role. Aside from the typical credentials that companies look for in every hire, there are also intangible skills that are non-negotiable. In short, it's not for everyone.?

However, if becoming an M&A analyst is an option for you, it can be a lucrative career. The average salary of an M&A analyst is around $79,000 per year and can go as high as $100,000, depending on employer, industry, and experience. Then on top of their salaries, analysts typically earn a sizable annual, performance-based bonus.

Educational Background

It's no surprise that the first requirement is formal education, and you must have a bachelor's degree in business, accounting, finance, economics, or any other related field. Other companies prefer candidates with master's degrees in business management or finance.?

Experience

Previous experience in related fields is always appreciated and would probably increase your salary. But investment banks or private equity firms often hire aspiring analysts, depending on their size. Another way to make yourself a more viable candidate is to do an M&A internship.

Skills Required

To perform the job effectively, there are certain skills that are absolutely necessary for an M&A analyst.?

Proficient in a Variety of Tech Stacks

You must demonstrate proficiency in the use of MS Word, MS Excel, and PowerPoint. It might seem basic but it is a must. Most companies use these for the creation of both visually and verbally engaging reports and presentations for senior M&A management and collaborating personnel.?

More companies are also shifting towards CRM and pipeline management systems like Dealroom. You need to be tech-savvy to adapt to whatever software the company uses to manage its data.?

Communication Skills

Since reporting is one of the primary responsibilities of an M&A analyst, communication skills are a must. Whether written or verbal communication, the clarity of communication, internal or external, can make a huge difference.?

Internal communications will include interaction with senior management and other colleagues, not to mention the analysis reports, which must be clear and comprehensive. The better senior management can understand the reports, the better their decisions.?

External communications, on the other hand, includes approaching prospective clients. The better the communication skill, the better the chance for executing the deal.??

Financial Modeling

To perform the primary role of an M&A analyst, you must be adept at financial modeling. An M&A model involves assessing the value of the combined business of two companies, the client and the prospective target, after the merger.?

This is why you must be precise at making assumptions and projections as you create these models and risk-benefit analysis. It is also important to look at similar companies and assess comparable multiples.?

Valuation

Another skill that you need to possess is the ability to use different valuation techniques. An M&A analyst is involved in determining the purchase price of the target company and the premium that needs to be paid.?

There are a variety of valuation techniques, such the times revenue method, cash discounted flow method, earning multiplier, book value, and many others. Depending on the company's strategy, you might need to use different methods for different deals.?

Industry Expertise

M&A analyst are usually bucketed into one particular industry, so it's important to be updated and aware of every development and change in the selected industry. Knowing the things that would impact the industry is a part of the role, which requires strong research skills.?

Your knowledge of the industry should also not be limited to domestic companies. International knowledge is imperative as cross-border transactions are always on the table, especially in this globalized world.?

Global Business Knowledge

A good understanding of the global economy is also important for an M&A analyst. Knowing how various countries work and what their M&A process looks like is vital.?

Basic Knowledge of Corporate Law

M&A is a huge transaction that involves many contracts and documents, including the structure of the deal and the due diligence, (which is a part of an M&A analyst's role). Understanding contracts, legal implications, and regulatory rules is essential.?

Entry Point

Entry-level analysts can join banks or investment firms of any size.?

At a small firm, the analyst works closely with senior management and will be more involved in transactions. Analysts will also be responsible for more due diligence work, given the size of the M&A team.?

At a large bank, the teams usually consist of more people and work may be dispersed wider, but you may be staffed on more deals simultaneously.

Last Word

An M&A analyst role can be very demanding, and requires long hours. But if you are up for it, it can be a very rewarding career.?

If you are looking to enter into the M&A industry as an analyst, now is a great time. M&A hit record numbers last year, and there are no signs of it slowing down.?

If you want to learn more about the rise of the M&A industry, read here:

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