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What Is The Role of Investment Bankers In M&A? The Non-Boring Answer


If you want to work in M&A, you better know what investment bankers are doing to serve their clients. 

Whether you’re looking for an internship or a full-time offer in IB, you’re pretty much guaranteed to be tested on your knowledge about the role of investment bankers and the tasks they have to accomplish on a daily basis. 

In this article, we tell you everything you need to know about the job of M&A investment bankers. We also share with you what kind of responsibilities you can expect to have, depending on your seniority level

The role of investment bankers in a nutshell
investment bankers

Simply put, the role of investment bankers in M&A is to advise companies who are looking to sell their business or acquire other companies

If bankers advise a company to sell its business (it can be the whole company or specific assets within this company), it’s called a “sell-side” M&A deal. If bankers counsel a company to buy another company or company’s asset, it’s a “buy-side” deal

The role of investment bankers is to ensure that the deal is completed smoothly, effectively, timely, and that their clients are happy with the terms of the transaction. 

Typically, a company looking to sell its business will use the help of M&A bankers to secure the highest possible selling price for the business. Conversely, a company who is interested in purchasing another company will leverage the expertise of bankers to acquire the other entity at the lowest possible price. 

On both sides (sell-side and buy-side), investment bankers add value by performing valuation analysis, negotiating with all the parties involved, communicating with shareholders, and other aspects that are critical to make the deal work. 

To give you a practical example, let’s say that you’re the owner of a healthy drink brand generating around $12 million per year. 

Imagine that you’ve been running the business for 10 years and that now, you’re looking to sell your company to reap the rewards of years of hard work… or perhaps giving the reins to someone else so that you can leave all your worries behind and sail solo across the Indian ocean…

Who do you go to to sell your company? M&A bankers. Preferably a top investment bank or an investment banking boutique with a strong track record and pristine reputation. 

Then, bankers will appraise the value of your business, market the company in a way that is appealing to potential acquirers, and help you sell your business for the best possible price, from start to end. 

Once the deal is closed, you get your mils, and you’re free to sail across the ocean… Or, you can also continue to be involved with the company while having a less active role. 

If you’re the owner of a company that is looking to grow by acquiring other businesses, you will also approach M&A bankers, but in this case they will help you identify a set of potential targets and make sure you acquire the best company at an attractive price.

How do investment bankers add value to their clients?
senior banker

Given the complexity of M&A deals, investment banks usually receive an enormous fee in compensation – ranging from 1% to 5% of the total transaction value. This means that a bank working on a billion-dollar deal can easily expect to earn high-single digit millions dollars on one single transaction. 

Now, how come that investment banks make so much money on these deals? Where exactly do they add value to justify such astronomical compensation? 

Well, there are several ways investment banks add value to their corporate clients:

  • Deal origination: bankers help their clients find companies that are a great fit for an acquisition or merger, or, in case of sell-side deals, find companies that could be potential buyers.

  • Industry analysis: investment bankers also add value to their clients by offering market research intelligence. For example, if bankers are advising a large luxury goods conglomerate for a potential acquisition, they may do extensive research in the luxury goods sector to provide their clients with an in-depth overview of the industry. This industry research may in turn prove highly useful to identify suitable acquisition targets. 

  • Company valuation: one of the key roles of investment bankers is to build detailed financial models to estimate the value of a company using current and projected financial statements. When you’re buying another company, you want to know how much it’s worth to make sure you’re getting a good deal. The purpose of these models is to obtain reasonable estimates of a target company’s valuation using sensible assumptions. Valuation models typically include a range of potential valuation, accounting for different scenarios. 

  • Negotiation: when pursuing an M&A deal, a company has to negotiate with other potential targets or acquirers to come to financial terms that are satisfying for both parties. Investment bankers are in charge of negotiating the best transaction terms on behalf of their clients.

Investment bankers also add value to their clients by performing due diligence (verifying that all the information gathered about a company is accurate before pursuing a deal), deal closing (ensuring that all the deal’s terms and conditions are respected), and post merger integration (making sure that their clients enjoy the promised synergies and benefits post-transaction). 

As an investment banker, what will you do on a daily basis?

Now, it’s good to know all this stuff… But what will you do exactly once you start working as an investment banker? What will be your daily tasks? The answer is: it depends on how senior you are. The higher you are in the hierarchy, the more client exposure you’ll have. Here is the type of responsibilities you can expect to have, depending on seniority:

Analyst (0-3 years of experience)
  • Preparing PowerPoint presentations for client meetings
  • Building Excel models, including valuation models
  • Performing industry research
  • Taking notes on calls and meetings
  • Writing market news summaries
  • Executing various admin tasks to make the lives of senior bankers easier (a lot of tasks can fall into this category)
Associate (3-5 years of experience)
  • Checking the work of analysts and making sure it’s accurate and up to the bank’s standards
  • Training junior analysts
  • Providing inputs and feedback on Excel models
  • Assisting in the execution of deals
  • Coordinating the creation of PowerPoint presentations
  • Interacting with clients (depending on the team size)
Vice President (5-7 years of experience)
  • Performing all the Associate-level responsibilities 
  • Managing and training junior colleagues
  • Attending client meetings
  • Developing client relationships and contributing to business development
  • Ensuring the accuracy and validity of financial models
  • Ensuring that projects are delivered on time
  • Actively participating in client meetings and delivering commercial pitches
Managing Director (7-10 years of experience)
  • Performing all the VP-level responsibilities
  • Developing client relationship and building new ones
  • Managing the whole M&A team
  • Leading deals from start to end
  • Mentoring Analysts and Associates, and briefing VPs for an effective allocation of time and resources
  • Spearheading client meetings and delivering commercial pitches
  • Ensuring that projects are delivered on time
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A word about the author

Aurelian Tran is the founder of Alpha Lane and an ex-Goldman Sachs analyst who has spent 4+ years working in the investment banking industry.

He founded Alpha Lane to help students and young professionals achieve their highest professional ambitions, by securing offers at top-tier financial institutions.