What does it take to build a career in Mergers & Acquisitions ?

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When two companies merge into one another, lose their identities and form a new identity which is a new company. It would also involve a purchase of one company wherein the target company loses its identity and becomes a part of the acquiring company. The process of merger and acquisition is an important part of the company’s life and it is undertaken because of many reasons. Some of the strategic objectives are shared synergies, expansion of geographies, leveraging technology advancement or entering a new product/service.

As an M&A analyst, you will be working as a part of the core team involved in the big mergers such as Vodafone-Idea, Ranbaxy-Daiichi Sankyo, Snapdeal and Freecharge, Flipkart and Myntra etc. Sometimes you may also work have to work on divestment deals and business restructuring.

You will be mainly involved with structuring the outline of the deal, identifying what would be the best-suited capital structure, planning for taxation, and mitigating risk through various modes. It is a very challenging and interesting profile wherein you have to handle many critical responsibilities. It is an opportunity to learn all aspects of a business.

The work is extremely rewarding, intellectually motivating and creates high visibility within the organisation. If the deal is executed well, the M&A analyst is lauded as well as becomes a sought after employee in the organisation. M&A analysts can find jobs in the Corporate Sector as well as Investment banks.

To excel in your career as an M&A analyst, you need to equip yourself with a certain number of skills. These skills are:

Financial modelling:

Thorough knowledge of financial planning helps you to be an expert in projecting the financials of the company. M&A models are unique and adeptness at financial modelling empowers you to develop M&A Models. The merger model is actually an analysis of how the combination of two companies performs after the merger. Apart from the model of the combined entity, both the companies also need to be valued separately. You must also be able to handle Integration of Financial Statements between the Target and Acquirer, preparing the premise for Valuation through DCF, Relative Valuation and Transaction Comps.

Valuation techniques:

An M&A analyst has to perform the DCF analysis of each business. After the forecast is complete, the next step is the valuation of the company. Apart from the DCF, there are various methods of valuation involved with the merger model. Hence, for handling the M&A deals, you need to have complete knowledge of all the techniques like Economic Value Analysis, Relative Valuation methods, Enterprise Value Multiples etc.

Deep industry knowledge:

Needless to say, M&A is a merger between two companies of the same industry. Hence it is very important that an analyst is well versed about the developments in the industry, the changing regulatory mechanism, the norms followed in the industry, the valuation multiples prevailing in the industry, etc. amongst all other things. For an expert industry analyst, answer to certain questions should be at his fingertips. These are questions like: What’s the average PE of the industry? Or what is the average EV /EBIDTA? Which company is an exception from a valuation point of view and should be ignored?

Knowledge of M&A Regulatory Environment:

There are a lot of legalities involved in the M&A procedure. Due to the increase in M&A activities in India, the legal and tax environment is continuously evolving. It is recommended that the team involved with the M&A activity has complete knowledge of the M&A regulatory environment. The regulatory landscape in India involves complete compliance with Companies Act, FEMA, Tax laws, delisting guidelines, Takeover Code etc.

The route to being an analyst for the Mergers and Acquisitions has to be a specialization in finance. The probable routes for carving a career in Merger and Acquisition are:

  • MBA Finance

A Masters in Business Administration with a specialization in Finance trains the student about exposure to various industries. The students are also exposed to case studies which give real life example related to the M&A scenario and lets them understand the complete procedure related to the Mergers.

  • CFA

Chartered Financial Analyst (CFA) designation is the gold standard in the finance industry. This course prepares the students for a global career in Investment Banking and Equity Research. There is a detailed curriculum in CFA Level 2 dedicated to the M&A which gives the students complete knowledge of the industry working. This qualification is quite popular amongst M&A analysts.

  • IMS Proschool Finance Certification

IMS Proschool, India’s leading training provider of Finance Certification, offers Certificate & training in “Investment Banking – M&A”course. This training will help the candidates to build mergers & acquisitions models & to analyse & value synergies. Only those candidates who will successfully clear NSE India – Financial Modeling Certification Exam will get training & certificate on “Investment Banking – M&A” & “Advance VBA and Macros”.

Find out Accretion and dilution of EarningPer Share after M&A:
•    Analysing and valuation of synergies.
•    Find out acquisition premium i.e. how much premium to pay to acquire a company.
•    Help in the decision making of mergers.