Within finance, working in the field of mergers and acquisitions (M&A) carries an extra patina of glamour. These corporate strategists study industries and buy, sell, divide, restructure, and combine companies with the aim of achieving greater growth and efficiency. Mergers and acquisitions analysts support these complex deals by evaluating financial reports, studying company operations, and deciding how a company will fit within another business or as part of a larger portfolio.
Mergers and acquisitions analysts do most of the preliminary legwork for potential deals. They analyze industry prospects by gathering information about growth, competitors, and market share possibilities. They also review company fundamentals and financial statements. The analyst will then build a mosaic to help upper-level managers make decisions on a deal. This work is done over many months, but during certain periods analysts can work very long hours—up to 18 hour days. It is an extremely stressful and high-pressured job.
Entry-level analysts can join mergers and acquisitions teams at small, mid-sized, and large banks or investment firms. At smaller firms, the analyst works hand-in-hand with senior executives and can find being involved in more aspects of a deal to be rewarding. The downside to a small firm is the analyst will be responsible for more of the research and due diligence in a deal. At a large bank, analysts may have a slightly lighter workload as there will be more people specializing in each task. The analyst will likely also specialize in a task and see less variation in duties. A large bank will have more resources for gathering data and information.
Education and Training
An entry-level M&A analyst likely has some prior experience as an investment banking analyst, very strong analytical skills, and a bachelor’s degree in accounting, economics, finance, or mathematics. Successful analysts should also have global market knowledge, good business understanding, problem-solving skills, and business intuition. Most analysts hope to advance to associate and then to director or principal. The top job in the field is managing director or partner. Beginning at the director level, duties shift from analyzing and executing deals to bringing in deals that make money for the firm. Analysts who hope to advance to the director level should have excellent sales skills as well as strong interpersonal, relationship building, and communication skills.
Typically firms have a hierarchy of analyst positions, from the entry-level college graduate to second and third-year analysts. After three years, analysts can be promoted to associates.
In general, the median salary for an entry-level mergers and acquisitions analyst is $82,684. However, depending on location, employer, and bonuses, an entry-level analyst can earn between $58,223 and $106,063. As with other investment banking analysts, bonuses can comprise a signification portion of annual compensation (although at the entry level it is much lower than at the higher levels). For the entry-level analyst, the median bonus may be around 7 percent. The experienced analyst may see a 16 percent bonus.
The Bottom Line
Mergers and acquisitions analysts are well compensated but the job can be demanding and require very long hours. Analysts must have strong financial and modeling skills to enter the field, and advancing to the director level requires strong interpersonal and sales abilities.