Job Description

 Investment Banker Analyst



Investment banking is a field that many people have assumptions of, but many are not exactly sure what bankers do. This past summer I worked in Mergers & Acquisitions (companies merging, making an acquisition or selling their company) for an investment bank. After receiving a full-time offer, I will be continuing as a full-time analyst after graduation.


Being an “analyst” is commonly associated with crunching numbers. Our job over the summer was mainly to assemble deliverables (using applications such as PowerPoint, Pitch Book or Excel) to help the analysis of our clients’ deals.


There are two main categories when it comes to Mergers & Acquisitions:
  • Buyside deals
  • Sellside deals

Below I’ll give some examples and characteristics of each kind of deal.


Buyside
A buyside deal is when one of our clients is attempting to buy another company. It sounds simple, but there are a variety of steps to the process and it can take a while from the beginning to the closing of the deal. First, we must run a fee-run analysis. This compares precedent fees paid to the advisor (investment bank) based on deals of similar size and difficulty. The size of the fee can be a result of whether we are the lead advisor or not (sometimes multiple firms may be working for the same client on the deal). The next step varies, as some clients know who they want to acquire, while others have no company in mind, they simply want to make an acquisition. This leads the analysts to estimate the value a variety of firms that the senior members on the deal consider potential acquisitions.


An analyst can value a company in a several ways. The most common include calculating the WACC, Discounted Cash Flow and Football Field Analysis of the target firm (the firm our client is buying). The WACC is the weighted average cost of capital, which is the average rate of return a company expects in order to compensate all its investors. A Discounted Cash Flow analysis (DCF) discounts the cash flows of the company using the WACC to find the Present Value of these cash flows, which makes it easier to compare firms’ assets. Lastly, a football field analysis lays out a variety of valuation multiples (such as WACC and DCF) in comparison to the industry average and to other potential targets.


Along with these valuations, analysts need to create financial models (projections) of the client (a stand-alone model), in which we project the revenues, expenses, and other metrics for a few years. Also, once the client chooses a target company, we create a merger model showing the combination of financials for our client and its target. Analysts’ create these spreadsheets on excel, they can run for hundreds of pages and are very specific to the senior bankers’ requests.


Sellside
A Sellside deal occurs when our client is attempting to sell part or all its company to a buyer. Like buyside deals, our client may know exactly who they want to sell to, or just know that they want to sell. We must conduct a fee-run analysis, like buyside deals, to see how much the bank will make for advising. Unlike buyside deals, however, sellside deals are often less financially and analytically focused. These deals tend to have more pitch book presentations, which help to summarize the client and the assets that are being sold. There are financial and valuation components, but a great deal of the work is making it clear to the buyer what they are purchasing and allowing them to handle a substantial part of the financial modeling.


There is a long process that accompanies sellside deals as well. We begin by sending the broadest materials to potentially buyers. Then, we narrow that group down to more legitimate buyers and send the next level of detail, including financial information. Then, these potential buyers will send their initial bids, which senior bankers will analyze and send to the client. Meanwhile, the buyers will be conducting their own due diligence, and our client will continue to narrow down the options until there is a single bidder left. From there, the process becomes more financially focused to finalize the purchase price and ultimately, close the deal.


The above description details the two main types of deals M&A bankers will come across. However, there are a variety of administrative and bureaucratic tasks as well that we must complete during the deal.

Below are some examples:

  •            We must take each deal to the “Fairness Committee” to clear any conflicts with the projected financials
  •            Our M&A team must work with the industry group our client is in (Real Estate, Healthcare, etc.) while creating the stand-alone (individual) financial models
  •            We must save every change to a presentation or financial model as a new version, so we can keep track of the exact changes made, in case of a mistake


Key Statistics
  • Flesch Reading Ease: 54.3%
  • Flesch-Kincaid Grade Level: 10.7
  • Passive sentences: 0% 

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