what an m&a analyst actually does - example

to answer questions as to what we might be required to do as an intern/analyst, i've drawn up a very brief example of a scenario that might arise and walk through a simple example of how such a task would be tackled. for simplicity i'll use a well known company in the telecoms industry.. BT :biggrin:

i'll frame it in a sort of a day in the life way.. but only for one task.

background: it's 9pm on a wednesday, you've been working on a client request order with a deliverable in 2 days.. your associate reluctantly unable to find anyone else with bandwith (spare capacity) comes to you with a task, conversation goes a bit like this:

associate: hey tsr analyst, the director has a meeting with a potential telecoms buy-side client who wants investment ideas.. i've drawn up a few comps, could you compile a company profle deck for BT (presentation). oh, he wants it by tomorrow morning.

tsr analyst: sure i'd be happy to :smile:

(but you know for a fact that the director won't read it until next week tuesday)

associate: sweet, *the associate gets some sheet of papers and scribbles in red ink how the layout should be* the deck should include a brief business description, management info, operating summary, business breakdown, market valuation, capital structure breakdown, key shareholders, debt maturity profile, a stock graph with its comparables, and any recent developments. any questions?

tsr analyst: this would be up to you to ask really..

- as analyst you must take away a few things here.. #1 this task is priority now, #2 you're trying to promote this company so your analysis should reflect this understanding

moving on.. you now need to start prepping, you want to gauge an understanding of the company so you'll trawl through the most recent annual reports getting an overview of the company, potentially jotting down key items on an excel document.. also a good place to look is various news sources, research reports and investor presentations.. so as you engage in your preliminary research you begin to build an understanding of how the company runs, where revenue and EBITDA (earnings before interest tax dep and amort) stems and how that has developed over time, and what research analysts believe where that is heading. by now you've spent about 30 mins to an hour getting an understanding, you begin your deck..

first page should look something like this:

Spoiler

first 4 parts include:
1) business description: quick summary of company - industry, what it does, location, employees, business lines. (can get from factset / yahoo finance.. and just alter to shorten it and sweeten it.. yay we can plagiarise)
2) operating summary: historical & forward looking valuation data which can include sales revenue, ebitda, ebit, capex, eps - depends on industry etc.. (research reports, annual report and just excel it all together.. formulas all provided by lord google)
3) management team: brief summary of the heads of the company and exec directors (the company website of the firm you're profiling)
4) business mix: fancy pie charts with nice colours, showing what the different business areas and their contribution to sales revenue + a geographical mix showing what region revenues come from (investor meeting pack, usually found on the companies website)

takes you a while to source the figure and complete this, by this time you've ordered your seamless web kebab and take a small break to eat at your desk because you're tired and still have a bit more work to do.. and now it's midnight.. you begin work on your second section with an end product looking something like this:

Spoiler

your next four parts might include:
5) market valuation - this is easier than it sounds.. simply calculate the enterprise value of the firm.. this simple formula can be found online, you take the current market capitalization of the firm (share price*amount of outstanding shares) + debt + preferred stock + minority interest - cash and cash equivalents (as they would reduce the net cost technically). quite simply you're looking for what the market values this firm and taking into account the capital structure. you could also value equity.. and what not to go deeper into the analysis or compare p/e against benchmark to see how market values the share of firm relative to its peers as demonstrated in my slide. - (fgures can be found on annual report
6) major shareholders - which is a list of shareholders and their holding - (generally can be found on comapny website in investor relations section)
7) capital structure - a breakdown of where the companies money is sourced from.. either debt or equity.. with maybe an inclusion of a ratio table showing some key financial metrics to guide an investors though process on leverage and capital efficiency (again easily computed through financial statements of a company found in annual reports)
8) debt maturity profile - visualise how much is owed to debt investors and when.. figures can be harder to find but trawling through some investor pack meetings should be useful in your attempts..

you feel a bit sleepy, and your associate has left.. probably to go some strip club somewhere and live that models and bottles lifestyle, but you still have a deck to complete so you aim to quickly complete the last segment.. which fortunately is quite simple and doesn't take you too long to complete.. looking something like this:

Spoiler

this includes your last 2 sections:
9) stock price perfomance - identify some comparables so you can analyse the stock performance against other similar companies, usually over a time horizon of 2-4 years, depending on what you're trying to show... play about and see what looks good.. (data easily computed by factset, yahoo finance - and compiled via excel onto a graph.. or there's even websites that do that and you can print screen)
10) recent developments - any significant news stories about the company, generally in favour of why it would be a good buy, especially if it's your job to get a deal going.

by now it's 12:45am but the work doesn't end there.. you now go back to your excel files, and check your numbers to ensure you've entered them all correctly, and re-read your deck to check for any misspellings. you ensure you source your excel numbers for future reference if need be and make sure your powerpoint slides are all neatly aligned (but tbh you can get an in-house team to do this for you). you quickly make a title page - idk why but i just do this at the end.. usually a generic structure your company will have, you just add a name and the logo of the company at the bottom.

Spoiler

you put a request in to get your work printed to hand for review in the morning.. it's now 1:30am and you decide to call it a day.. you ensure all your documents are saved.. and you send an email to your director cc'ing your associate (ensure you do it at this time.. extra props).. saying that the task is complete and a first draft is at his desk, whilst attaching your deck. you call for a cab home (all expensed to your clients ofc) and walk around the office to see if any friendly colleagues are about before you head home.. and wake up 8am the next day to complete your other deliverable.. whilst another 30 other things are likely to come up the next day :smile:

hope this is somewhat informative

(edited 7 years ago)

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Reply 1

username738914

Original post by gr8wizard10

Fantastic post! You put in a lot of effort into the presentation aha, love it.

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Reply 2

Cluster1

In ib I understand the salary's and bonuses are extremely good however the hours are also extremely bad do you believe the salary:working hours ratio to be worth it and how many years do you have to work the extensive hours before you are promoted to a more relaxed position?

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Reply 3

Commercial Paper

Original post by Cluster1

There are no relaxed positions in M&A. Arguably, it gets worse in terms of stress the more senior you get. You have less hours but bigger problems.

Hours significantly cool off after around five to six years (VP Level and above).

Whether it is worth it is completely subjective. Depends on your longer-term goals and what you want out of your career.

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Reply 4

gr8wizard10

Original post by Cluster1

that's a very subjective question. however the ratio in itself isn't that great relative to other jobs until you reach associate/vp level where it really kicks off with 6 figure salaries. personally, i think it's worth it, as i'd call myself a workaholic, and prefer the working environment.

at vp level you work till maybe 9.. if you want to call that relaxed. md's leave the office at around 6/7.. so it you'd need a significant amount of years exp really

**this is for m&a mind you.. other departments such as dcm regularly leave at 7pm, even at analyst level.

You are awesome

Original post by Infamous*

You are awesome

glad you found it of use

Reply 7

Daniel9998

Would love it if you could do one for S&T, if you ever get the time/can be bothered. :smile:

Reply 8

gr8wizard10

Original post by Daniel9998

Would love it if you could do one for S&T, if you ever get the time/can be bothered. :smile:

as an intern i never actually traded anything so it would be just a bunch of adhoc tasks that i completed at the request of my line manager and team members, whilst prepping trade idea presentations and shadowing various desks. don't think it would be quite elaborate as the IBD ones because a trading internship can vary a lot depending on desk/business needs/work to go around.

personally i was seen as that kid who was able to use vba, so was generally asked by team members to help them automate some tasks they did or automate a model procedure such that its easy to use across the desk, also made my own models in spare time to get a better understanding of some of the products we were trading. most of the time i spent on the trading floor involved learning via speaking to people across the floor, and then modelling my own excel spreadsheets to solidify what i've been taught.

Reply 9

Daniel9998

Original post by gr8wizard10

Is the pay for a trading intern significantly lower than an IBD internship? Seeing as you arent actually contributing as much?

Reply 10

Commercial Paper

Original post by Daniel9998

Is the pay for a trading intern significantly lower than an IBD internship? Seeing as you arent actually contributing as much?

No - £50,000 base pro-rata at most major banks across IBD and S&T.

Reply 11

Daniel9998

Original post by Commercial Paper

No - £50,000 base pro-rata at most major banks across IBD and S&T.

So you get paid the exact amount as an first year analyst but you dont actually contribute to the business anywhere near as much as an analyst does (in S&T)? Doesn't make much sense

Reply 12

username738914

Original post by Daniel9998

So you get paid the exact amount as an first year analyst but you dont actually contribute to the business anywhere near as much as an analyst does (in S&T)? Doesn't make much sense

Well, you can't.. Not until you've passed the regulatory tests at least. The S&T internship is for your own education, the bank knows they're not making a return on you at all, (not even after 1-2 years as an analyst) until you have your own book.

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Reply 13

Commercial Paper

Original post by Daniel9998

So you get paid the exact amount as an first year analyst but you dont actually contribute to the business anywhere near as much as an analyst does (in S&T)? Doesn't make much sense

You do not get paid the exact amount as you will not receive a bonus. Most First Year Analysts will receive £60,000-80,000 in total at major institutions.

Banks see you as an investment, they expect you to work really hard, learn as much as possible and meet as many people as possible so you can become a high-performing Analyst when you eventually join.The high salary is to compensate for the number of hours you will work as an intern and the fact you will be given less than desirable tasks. Everything no one else wants to do will drop to you.

Reply 14

gr8wizard10

Original post by Daniel9998

Is the pay for a trading intern significantly lower than an IBD internship? Seeing as you arent actually contributing as much?

same pay

Reply 15

Trapz99

Woah you've put a lot of effort into this, nice
💯 for effort

Reply 16

TheSnazzyMan

Thanks for the thread, it was really helpful!! :clap2:

Reply 17

Noble.

Original post by Daniel9998

So you get paid the exact amount as an first year analyst but you dont actually contribute to the business anywhere near as much as an analyst does (in S&T)? Doesn't make much sense