One of the most important sub-function of the investment banking is mergers and acquisitions also known as M&A. The role of a M&A professional is critical for the investment banks, as she is the person who assists banks’ wealthy clients in executing business mergers as well as corporate acquisitions.
Understand this: The decision of either merging with another firm or acquiring one firm is not an easy one and involves plenty of work that needs to be done including the pricing and deal structuring. In addition, there are critical due diligence proceedings that have to be taken care of – yes, all these are taken care by an M&A professional.
Investment banking industry has dedicated M&A departments where they address their clients’ challenges related to the execution of mergers and acquisitions.
But what exactly are mergers and acquisitions? What is the role of an M&A professional in the investment banking industry?
To find out the answers to these questions keep reading:
Merger is a process that involves two or more companies that decide to join hands for both business growth and attain increased profitability. Acquisitions on the other hand are the processes where one company buys the other.
It is clear what is merger and acquisition, now let’s understand what is the role of an M&A in an investment banking industry.
The M&A professional’s role in the investment banking industry comprises three parts
- Origination is the first part. This is where the deal’s sourcing happens.
- Due diligence and Negotiations are the second and a crucial part. This is the part where the M&A professional executes the development of financial modeling. Once this is complete that is when the negotiations come into effect.
- Monetary transaction also known as the rendition is the third and the last part of the M&A process.
The M&A is a critical sub-division of investment banking industry and also one of the most difficult field to enter into at the graduate level. Let’s have a look at the qualifications required to become an M&A professional in the investment banking industry.
A bachelor’s degree in accounting, economics, finance, or mathematics is a must for an entry-level professional along with some prior experience in the investment banking industry. At a senior level M&A professionals have an MBA degree or even a degree in law.
While advanced degrees may not be necessary, aspiring professionals can go for investment banking certifications from some of the reputed certification bodies like Investment Banking Council of America. In addition, to the investment banking certifications, in the US, aspiring professionals need to go for mandatory licensing exam conducted through the Financial Industry Regulatory Authority (FINRA). It is mandatory to maintain and renew this license at regular intervals.
In addition, to the certification in the investment banking M&A professionals at a senior level are expected to expert-level proficiency in accounting, business, finance, law, and strategy are a must. Apart from investment banking certification, M&A professionals are expected to
- Have knowledge of business valuations,
- Have an ability to identify the target company’s position through balance sheet’s analysis, income and cash flow statement
- Be aware of the acquisition strategies and financial business law
For those aspiring to become an M&A professional remember that while academic qualifications are important, it is also crucial to have investment banking certification if you wish to court success in the field.