M&A (Mergers & Acquisitions) or Merger-Acquisition in French, is one of the most prestigious professions. However, it remains extremely restrictive. To excel in this branch, it is important to use your strategic sense and your financial analysis. Zoom behind the scenes of this profession, but also the salaries in M&A!
M&A remains one of the most popular courses for young Grande École graduates despite restrictive schedules and significant pressure. It is indeed a prestigious profession which opens royal doors to candidates in the world of finance. M&A is one of the most profitable branches of corporate finance alongside Private Equity. Between extended hours and unlimited bonuses, the salary in M&A corresponds exactly to the clichés that most have of finance.
Definition of M&A (or merger-acquisition)
The term “Merger & Acquisitions” (M&A) corresponds to the consolidation or combination of two companies or assets through financial transactions, such as mergers, acquisitions or disposals. These last operations are closely linked to corporate finance and are carried out by teams in investment banking or auditing firms such as PwC or Deloitte.
The ultimate goal of mergers and acquisitions is to enable a company to accelerate its external growth. This notably involves the development of its activities in order to strengthen its financial performance. This type of growth is opposed to internal or organic growth and has a large number of advantages: economies of scale, tax reasons, expansion strategy (entering a new market).
An M&A operation has a direct effect on the financial markets. At a time when large groups listed on the stock exchange are facing rumours, it can upset the share price if the deal is deemed too high and there is a great deal of uncertainty surrounding the effects of the operation. In the same way, rumors can also cause this price to rise in the event of optimism.
Types of M&A transactions:
- Horizontal concentration operations: organizations merge with competitors
- Vertical concentration operations: companies proceed to the acquisition of their customers or suppliers.
- Conglomerate operations: companies diversify in their activities to be less affected by a change in economic conditions.
Read also: The testimony of Victor, intern at In Extenso Finance & Transmission in M&A
M&A: A demanding but very formative universe
An M&A analyst is confronted with an incalculable number of issues, diverse and varied, related to different sectors. His daily life is driven by high-speed learning. He must indeed acquire technical and specialized knowledge to be operational. In addition to theoretical, technical and sectoral knowledge, he must demonstrate impeccable rigor and organization at work. In just a few hours, he must be able to draw up a business plan or model a company’s development strategy in Excel.
In investment banking, young graduates have the chance to work within a structure where the culture of high standards and commitment are the key words. They interact with extremely competent colleagues. However, 90-hour weeks are sometimes difficult for some young graduates who quickly feel taken aback. To compensate for these restrictive aspects, companies rely on the financial aspect and on benefits in kind: 24-hour access to workspaces, meals and travel expenses paid by the company.
The working atmosphere is not always pleasant and opinions within investment banks differ from one person to another. It is therefore important to inquire directly with internal employees or former bankers. However, do not expect a startup atmosphere. If you want to turn to this profession, it is advisable to do so for the right reasons and not for social prestige or remuneration. It is important to be passionate about the world of finance and strategy.
Read also: Internship at EY, the testimony of Victor, student at Grenoble EM
The hierarchy in investment banking
Like a large number of jobs in finance, the hierarchy is omnipresent and begins with the trainees.
- The trainees: they take part in the various daily missions of the investment bank and are supported by analysts. That said, they work hand in hand with the analysts and carry out the missions entrusted to them. It is almost impossible to move on to the position of analyst without having completed one or more internships in M&A beforehand.
- The Analysts : they take care of all the execution part of the transactions. After three years they can qualify for Associate status.
- The Associates : they check the documents produced by the analysts and determine their quality. In addition, they perform valuation calculations in collaboration with analysts. They supervise the work of the analysts so that the final rendering corresponds perfectly to the requirements of top management.
- The Vice Presidents: their role is to validate the work carried out by the junior teams. They have direct access to the top management of the merchant bank.
- The Directors play a strategic role sincethey drive all the work that needs to be done by people below in the hierarchy. This is the last person who will judge the quality of the renderings and who will ask for adjustments or corrections if necessary.
- The Managing Directors or “MD” implement the investment banking strategy with the aim of attracting ever more partnerships thanks to their very wide network and their experience.
Read also: Meeting with an Analyst at JP Morgan in London
M&A salary according to hierarchical level
- The salary of an M&A intern: Salary between €1,500 and €2,500 per month.
- The salary of an M&A Analyst : Fixed part between 40K€ and 80K€ per year and a bonus of up to 100% of fixed salary.
- The salary of an M&A Associate : fixed part between 80K€ and 160K€ per year accompanied by a bonus of up to 100% of fixed salary.
- The salary of a Vice-President in M&A: fixed part between 100K€ and 200K€ per year and a bonus of up to 100% of fixed salary.
- The salary of an M&A Director : Between 150K€ and 250K€ per year, in addition to the bonus part.
- The salary of a Managing Director in M&A : Between 250K€ and 500K€ in addition to the bonus part.
Read also: How to apply for M&A, the screening
M&A: Salaries offered by Goldman Sachs, Morgan Stanley and others to juniors
At Slaughter and May, juniors earn a salary of £100,000, or almost €117,000 a year. Goldman Sachs, for its part, wanted to improve its image and attract new candidates for its M&A department given that a large number of juniors complained about the work atmosphere and working conditions. Profiles Analysts will receive a salary of $110,000 per year the first year, then $125,000 the second year.
Morgan Stanley has also aligned its salaries so as not to cause a drain of M&A talent to Goldman Sachs. Juniors will now be paid $100,000 in the first year. These companies are not the only ones wanting to stand out on salary. JPMorgan, Barclays and even Bank of America have all agreed to raise the salaries of newcomers to M&A from $15,000 to $25,000. At Credit Suisse, we even pay attention to the quality of life at work. The company thus offered a Peloton bicycle to newcomers.
However, if these salary increases in M&A are very interesting and can attract interesting profiles, in reality they are only cover-ups that divert attention from the root of the problem. Thus, the working conditions will not fundamentally change, despite the complaints of the employees – and more particularly of the juniors. The proof is: David Salomon, CEO of Goldman Sachs, declared that working from home was “ an aberration that we will correct as soon as possible. Not sure that the remuneration is enough to attract new generations.
Read also:12 hours a day, 6 days a week: JP Morgan’s recommendation for excelling at your job!