How to Become an M&A Analyst

What is an M&A Analyst?

The primary role of a mergers & acquisitions analyst is to help companies and organizations in the process of combining, selling, or buying a business. M&A analysts dwell in the preliminary stages of potential deals, especially assessing financial reports and studying company processes. 

Other than that, an M&A Analyst analyzes and reports the potential impact of a merger/acquisition on the organization. They also consider how a company fits within the fences of the other business.

M&A analysts are critical to a company's overall growth as they also handle gathering information and the analysis required for competitor aspects and market share possibilities. The analysts influence upper-level managers' decisions on a deal.

What does an M&A Analyst do?

There are two 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 acquisition, while sell-side analysts pitch companies to potential buyers. Whichever side an analyst is on, the role comprises a few significant tasks, including research and reporting usually given by the associate. An M&A Associate is considered one level higher than the Analyst. 

1. Research

The primary role 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 possible deals, such as approaching target companies and collecting vast amounts of data and information.

2. Reporting

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

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

3. 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, they help review the target company's financial statements. 

Key Skills required for M&A Analysts

Being an M&A Analyst requires you to have a combination of specialized skills. To give you a breakdown, here is a list of these critical skills:

Hard Skills

1. Proficient in a Variety of Tech Stacks

You must demonstrate proficiency in using MS Word, MS Excel, and PowerPoint. It might seem basic, but it is a must. Most companies use these to create 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 the company's software to manage its data. 

2. Basic Knowledge of Corporate Law

M&A is a huge transaction involving many legal 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 are essential. 

3. 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 after the merger, your client, and their prospective target. 

You must be precise at making assumptions and projections as you create these models and risk-benefit analyses. It is also essential to look at similar companies and assess comparable multiples. 

4. Valuation

Another skill you need to possess is using different valuation types. An M&A analyst is heavily involved in determining the purchase price of the target company and the premium that needs to be paid. There are many valuation techniques an M&A analyst must master, including the times-revenue method, cash discounted flow method, earning multiplier, book value, and many others.

Check out this comparison of the best valuation courses to help you add this skill on your resume.

5. Industry Expertise

As an M&A analyst, you need to know one particular industry. You need to be updated and aware of every development and change in your selected industry. Knowing the things that would impact the industry is a part of your 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. 

6. Global Business Knowledge

M&A isn't limited domestically, so a more comprehensive grasp and understanding of the global economy and the corporate landscape is critical. M&A analysts need to be aware of the international business operations in varied countries and the process of buying/selling activity there. That could also mean being aware and having a deeper understanding of the different cultures of the cross-border companies potentially involved in the deal.

Soft Skills

1. Communication Skills

Since reporting is one of the primary responsibilities of an M&A analyst, communication skills are a must. Whether written or verbal, the clarity of internal or external communication 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, include approaching prospective clients. The better the communication skill, the better the chance for executing the deal.  

2. Willingness to work long hours

Being an M&A Analyst takes a lot of bandwidth and will require you to work long hours each day, especially when there is a current transaction. During deals, you might have to work 15 to 18 hours a day, which will last for months. If you don’t have this kind of patience and rigor, then this probably might not be the right career for you. 

3. Team Work

Being an M&A Analyst means you are a part of a team. A very important skill to have is the ability to work well with others and be likeable. If you do not have the social skills to foster good relationships with your superiors, then you won’t last very long in this role. 

How do I become an M&A Analyst?

Just like any job, there are specific requirements needed for this role. You need your skills backed up by credentials that will turn the heads of companies in your direction. 

Educational requirements

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.

How long does it take? 

How long to become an M&A Analyst depends on the role that you are applying for. There are two types of Analyst: Junior and Senior. 

If you are aiming for an entry-level Junior Analyst position, companies usually require 3 years of working experience in related fields after graduating college with your chosen degree. A senior analyst position will require 3 to 5 years of experience in an Analyst role. 

Day in a life of an M&A Analyst

So what does a typical day look like for an M&A analyst? It starts by researching the global business market on ongoing and forthcoming trends. Even when you wake up or at breakfast, you will be checking emails, voicemails, or any news you can find so that you are not the last to know. 

What is the workplace like

When you arrive at the office, analysts spend most of their time working with the M&A team and researching the prospective company to develop a deal summary. As their core task, they will conduct an in-depth analysis of the prospective company, enabling them to present instructive findings that could help the team. That opens the doors to executing better action plans for due diligence and supporting a preferred approach in enacting the deal. 

If a deal is in-flight, you will also attend meetings with your VP and associates to discuss merger models. M&A Analysts communicate all the details and processes of the deal with cross-functional departments as part of the due diligence. If you want to know more about the typical day of an M&A analyst, you can check out this blog, where an actual M&A analyst describes how it goes.

M&A Analyst Salary

If becoming an M&A analyst is an option for you, it can be a lucrative career. These positions range from entry-level college graduates to second and third-year analysts. Generally, the median salary for an entry-level M&A analyst is $82,684. However, an entry-level analyst can earn between $58,223 and $106,063.1, depending on location, employer, and bonuses. The job of an M&A analyst can be demanding and require extended hours, although rest assured that they are well-compensated. 

Common M&A Analyst Interview Questions

When applying for an M&A Analyst role, expect the question to revolve around your knowledge and background regarding mergers and acquisitions. You must have enough experience and the proper academic background to succeed in the recruitment process. During the first level of the interview, you'll typically be thrown these common questions:

1. What experience do you have in an M&A role?
2. How has your education prepared you for working in finance?
3. Can you describe a situation when you used your problem-solving skills to resolve a conflict?
4. What was the most successful deal you worked on?
5. Do you have experience coordinating M&A processes?
6. What's your experience with modeling and forecasting acquisition plans?
7. Do you have experience working with financial analysts?
8. Can you tell me a situation when a project you worked on failed?
9. What's your greatest professional achievement in this field?
10. Do you have experience with public speaking?
11. How would you rate your understanding of demand to quote and quote to cash processes?
12. What's your experience in researching and sourcing new deal flow opportunities?

The common questions revolve around what you know and how well you know about M&A. To answer these questions, you need to be well-versed in the industry, which is why your educational background, expertise, and experiences are vital.

Read also: How to Pass an M&A Interview - Sample Questions and Tips

How do I find a job as an M&A Analyst?

The best way to find a job as an M&A Analyst is to look at industries where M&A is most common. There will be various companies of different sizes where an M&A analyst role is very much needed, but you will need to niche down to the industry you find most inclined to. 

Before leaping to the company you wish to work for, it's best to consider the economic conditions that influence M&A activity. The most active sectors will be the best ones to step into as an M&A analyst as it is where you can utilize the most of your potential and provide the most value.

Continuing education for M&A analysts

It is vital to have formal education and some experience in the industry to become an M&A analyst, but learning about M&A doesn't stop there. In fact, it's only the beginning.

On M&AScience, you will find all the tools you need to become a successful M&A practitioner. Why not start by subscribing to the M&A podcast?

And if you are looking to take your M&A credentials even further, check out the M&A Science Academy where you can learn from and replicate the exact methods of 30+ M&A industry experts.