collageSome of the world’s largest companies and many smaller ones owe much of their success to the benefits derived from mergers & acquisitions (M&A). The phrase “mergers & acquisitions” refers to a business strategy of purchasing or combining companies to achieve cost savings, expansion, an improved capital structure, and other goals. Unfortunately, the mergers and acquisitions landscape is also littered with corporate combinations that fail to thrive due to poor strategic planning, inadequate due diligence, and other problems. M&A professionals can help avoid these pitfalls and ensure that the two companies join successfully. Read on to find out if a career in this growing industry may be right for you.
What Is a Mergers and Acquisitions Concentrations?
Mergers and acquisitions concentrations prepare students for careers improving corporate performances and developing new businesses. This concentration builds on fundamental accounting and finance principles, including company performance, strategy, and operational decision-making, examining the nuances of corporate restructuring.
Through coursework, internships, projects, case studies, and capstone experiences, students learn to provide actionable advice to companies that are merging, acquiring another business, or getting acquired. Learners study topics such as mathematics, communication, data, trading, market forecasting, and business law.
Graduates can work as risk analysts, take mergers and acquisitions jobs, or move into senior financial leadership roles at companies. Professionals who want to work in investment banking also need an M&A background to earn licensure through the Financial Industry Regulatory Authority.
Often, a bachelor’s degree gives students the education they need to launch their careers. An MBA or an MS in accounting with an emphasis in mergers and acquisitions can help financial professionals advance to the next level in their careers.
Bachelor’s Concentration
A bachelor’s degree provides the fundamental education required for most entry-level accounting and finance jobs. In this program, students take courses on topics such as statistics, business finance, cost accounting, and principles of accounting. M&A students may take additional courses in banking and finance to prepare for future jobs or advanced degrees in mergers and acquisitions.
Master’s Concentration
As with any master’s degree in accounting, students pursuing an M&A concentration complete core coursework in general accountancy. This coursework usually includes topics such as quantitative skills, financial accounting, data analysis, and business ethics. An MBA emphasizes business courses, while an MS and a master of accounting (MAcc) focus on accounting courses.
In addition to these subjects, M&A students take courses specifically related to mergers and acquisitions, such as advanced financial reporting, negotiation strategy, and post-merger integration.
Why Get a Mergers and Acquisitions Concentration?
An accounting degree with a mergers and acquisitions concentration offers many professional and personal benefits, such as preparation for high-paying finance careers. The list below details just a few of the benefits an M&A degree can provide.
- Pursue Leadership Roles in Federal Acquisitions: The U.S. government offers careers in acquisition, contracting, purchasing, and program and project management. Taking mergers and acquisitions courses can help students prepare for these federal roles.
- Prepare for the CPA Exam: Earning a certified public accountant (CPA) designation can dramatically increase an accountant’s career and earning potential. An M&A degree can help students qualify and prepare for the CPA exam.
- Compete for Top Financial Positions: Senior M&A managers, risk management professionals, and financial executives hold some of the most well-paying positions in finance. Generally, these positions require focused knowledge rather than general skills.
- Gain Risk Management Skills: Students learn how to anticipate the effects of an unfavorable event and recommend a course of action to mitigate or avoid that event.
- Gain Financial Management Skills: This degree teaches students how to overcome financial problems, converting these challenges into benefits for their employers.
When an M&A Concentration Is Better Than a General Accounting Degree
Students seeking careers in risk management or M&A should consider an M&A concentration. Learners who plan to work in federal acquisitions also benefit from a specialized educational track.
When a General Accounting Degree May Be Better Than an M&A Concentration
A general accounting degree may better serve students who are unsure of their career goals or who want to keep their job options open after graduation. It is not necessary to specialize if, for example, a student plans to become a CPA but has no specific career focus beyond that ambition.
What About Other Concentrations?
The finance and accounting fields offer a wide array of potential concentrations that lead to lucrative and fulfilling careers. Prospective students can use the links below to learn more about the possible academic tracks and career outcomes of some of the top specialties in accounting.
Careers for Mergers and Acquisitions Degree Graduates
Earning a degree in accounting or finance with a concentration in M&A can help students launch careers in areas like corporate risk analysis, public accounting, financial leadership, and acquisition analysis. These jobs can provide lucrative wages; according to the BLS, business and finance professionals make a median salary of $69,820 per year.
While undergraduate students can pursue a specialization in mergers and acquisitions, the field especially welcomes professionals with graduate education. A master’s in accounting or an MBA with a specialization in M&A can qualify graduates for senior management jobs, risk analysis positions, and CFO roles. Graduate programs also prepare students for CPA credentials.
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Risk Manager
Risk managers help companies prepare for, deal with, and respond to financial risks. They create what-if scenarios that help corporate leaders project their losses in the event that certain risks become real. These professionals may work for a single corporation, or they may act as consultants who serve several companies.
Annual Average Salary:�$86,840
Senior Manager, Mergers & Acquisitions
In this sensitive, high-level corporate position, professionals study potential opportunities for growth through mergers or acquisitions. The senior manager evaluates other companies for purchase or merger, formulates a plan, presents recommendations to the board, and engages in negotiations with sellers. Usually, senior managers lead a full M&A team of accountants and financial professionals.
Annual Average Salary:�$124,903
Chief Financial Officer
Sitting in the top financial position in a company, a CFO takes leadership responsibility for all of that company’s financial operations. This officer makes up part of the c-suite along with other top executives who together provide strategic direction to their corporate enterprise. Typically, finance and accounting departments fall under the CFO’s purview.
Annual Average Salary:�$134,044
Financial Analyst
Financial analysts help companies add to the bottomline by studying the factors that affect corporate wealth and offering recommendations based on what they learn. These professionals help companies protect their investments during tough times and expand during high-growth seasons.
Annual Average Salary:�$60,781
Certified Public Accountant
CPAs handle an array of financial documentation for companies and individuals. These professionals may handle taxes, audits, accounts, and government reports. Some CPAs work in the finance departments of large corporations, while others work at accounting and auditing firms. Some CPAs set up their own small businesses and serve customers directly.
Annual Average Salary:�$66,287
Why Companies Engage in M&A
M&A professionals need to be familiar with several types of transactions. A deal can involve an acquisition, which is a 100% purchase of a target company. A merger is a combination of two companies into a single entity.
A minority or non-control investment typically involves the purchase of less than 50% of a target company, and a joint venture and/or strategic alliance is a collaborated effort between two entities to join together and work on a common initiative.
Companies engage in mergers and acquisitions for a variety of reasons:
- Revenue synergies. A target company may offer opportunities for an acquiring company to increase its revenue through access to new customers, an innovative product development team, or expanded geographic reach. Diversified product and service lines can also lead to cross-selling opportunities. Companies may also target another company to acquire their proprietary technology or superior R&D department.
- Cost synergies. By eliminating redundant roles through the newly combined entity, management hopes to reduce operating or capital expenditures. Finance, accounting, legal, procurement, and human resources from two entities can be combined to achieve cost savings while allowing the newly combined entity to retain the best talent. In addition to streamlining initiatives, a larger entity may enjoy more significant discounts from its suppliers.
- Capital risk reduction. Companies can be seen as cash flow streams that senior executives can proactively manage to reduce the volatility of that cash flow. The market sees a reduction in volatility as a reduction in investment-capital risk, and rewards accordingly. Combining two or more companies and, subsequently, their cash flow streams may reduce the risk of the overall portfolio company.
- Higher valuation multiples. Larger companies are often valued at higher multiples than smaller companies. Generally speaking, larger companies are perceived as less risky because of greater resources and access to capital.
Selecting an Accounting Program with an Mergers and Acquisitions Concentration
Choosing the right school is key to launching a successful M&A career. Generally, colleges and universities that excel in fields such as economics, finance, banking, or business provide top-quality education in mergers and acquisitions. Future students should consider factors such as prestige, cost, culture, program length, and accreditation when weighing potential programs.
Any institution under consideration should hold regional accreditation, and the best programs typically hold additional accreditation from the Association to Advance Collegiate Schools of Business International or another relevant programmatic accrediting body. Accredited online programs typically offer the same academic quality as their on-campus counterparts.
The Role of the M&A Professional
As more companies seek to consolidate or globally expand through mergers and acquisitions, the opportunities for M&A professionals should continue to grow. Those interested in entering this field should expect to travel frequently and often work long hours in a high-stress environment.
M&A professionals are charged with a variety of responsibilities to help create successful outcomes, both before the deal closes and afterward. Those investigating a career in this field must be highly adept in business strategy, finance, and interpersonal skills. Flexibility is key, since professionals are likely to face numerous transactional issues daily, and virtually all contemplated deals have unique features. They need to properly assess a proposed combination and ensure that the newly combined equity succeeds in providing shareholder value.
Questions an M&A professional will need to address include:
- How can a proposed combination between entities create shareholder value?
- Are go-forward assumptions reasonable?
- What is a fair price to pay for the target company?
- Do the potential rewards adequately compensate for risks undertaken?
An M&A professional’s mission is to guide a transaction toward a successful conclusion. Duties may include:
- Sourcing the transaction. This involves properly identifying and communicating with potentially relevant target companies based on defined acquisition criteria directed by management.
- Deal filtering. Exchange of communication inevitably leads most companies to become classified as not feasible for a potential acquisition. Pricing expectations may be unreasonable, or the target’s direction may not be aligned with the acquiring company’s. A substantial difference in culture can also thwart a deal. Deal filtering is critical as a completed deal of two divergent companies can lead to disaster for all parties involved. For example, the merger of AOL and Time Warner resulted in a significant loss of value for shareholders.
- Due diligence. The process of evaluating and confirming financial and operational information, as conveyed by the target company’s management, involves conducting operational and legal risk assessments of a company.
- Valuation and deal structuring. This stage involves performing a combination of appraisal techniques, such as the discounted cash flow (DCF) method. M&A professionals also look at similar companies within the industry and assess comparable multiples. Deal structuring involves the successful execution of negotiation points, such as employee contracts, securing financing for a deal, pricing, and assigning ownership of contingent liabilities.
- Post-merger integration. In this final phase, management executes an integration plan mandated and approved by senior executives to successfully realize the benefits of the transaction promptly.
Qualifications
Education
Practicing mergers and acquisitions requires a strong proficiency in accounting, finance, law, strategy, and business. While it is not necessary to have an advanced degree, many M&A professionals have MBAs, and less frequently, law degrees. Certifications, such as a Chartered Financial Analyst (CFA) or Certified Public Accountant (CPA), can help in landing an initial M&A role.
Speak “Business”
Professionals must be familiar with business valuations and able to understand, as well as speak, the language of accounting. Thorough understanding of a company and the ability to discern its distinct position in the marketplace through the analysis of its income statement, balance sheet, and cash flow statement are key elements of the job. Interviews with management are important to analyze operations, drivers, and motivations. Understanding cash flow from operations and being familiar with similar companies within the same industry will provide some basis for a preliminary judgment of a company’s value.
Unspoken motives can often drive a deal, and the ability to evaluate what is said and what is not said is a key success factor. M&A professionals must also have leadership skills and the ability to get along well with others. They are often tested in highly stressful environments, where data points must be complete, relevant, accurate, and timely. Meeting short deadlines is critical, especially in a competitive buyout market. With a flood of paperwork accumulated from months of communication, dealmakers should be prepared to summarize information into a few pages for executive review. Strong negotiation skills allow M&A professionals to influence the process to move forward while avoiding the pitfalls that could lead to deal termination.
Proven Track Record
There are multiple paths to becoming an M&A professional. Demonstrated success in business, no matter the field, shows that an individual has the interpersonal skills, business and financial acumen, leadership traits, and negotiating ability to succeed in M&A. Just as important, dealmakers need to be able to envision the opportunities a deal presents during what is likely to be a lengthy and complex process.
The Bottom Line
A newly combined entity has a real opportunity to elevate its station in the marketplace, enrich its stakeholders, employees, and customers and provide shareholder value. Although many transactions accomplish their intended goals, a good number end with disappointing results. During the negotiation process, a lack of foresight, improper due diligence, or unreasonable expectations can reduce the chances to enhance revenue and realize cost synergies. After a deal closes, clashing corporate cultures or diluted corporate identities loom as a threat.
Luckily, properly prepared M&A professionals can help merging companies to transition successfully, avoiding potential problems and helping to ensure a beneficial outcome for all parties involved.
How to Become a Mergers and Acquisitions Professional
Education and Certifications
Most people get their start in mergers and acquisitions by obtaining a bachelor’s degree in a relevant field like accounting, finance, mathematics, or economics. While a master’s degree is not required to enter the field, many associates and higher-level M&A professionals have Master of Business Administration (MBA) degrees.
Certifications like Chartered Financial Analyst (CFA) and Certified Public Account (CPA) can help you advance your M&A career. But, again, they’re not required.
In the U.S., entry-level investment banking professionals are required to pass exams from the Financial Industry Regulatory Authority (FINRA). These exams certify them as professionals who can carry out specific financial competencies.
Early professionals who want to be in the M&A field can expect to take two exams: the Securities Industry Essentials (SIE) and the Series 79. The SIE is a general exam for all financial services professionals. The Series 79 is designed explicitly for investment banking certifications and assesses major job function competencies like data analysis, underwriting, and understanding of mergers and acquisitions processes.
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Skills
M&A professionals need a mix of hard and soft skills to thrive in their roles. Hard skills are the more technical skills and ones you’ll need to pass the FINRA exams, including:
- Data analysis
- Forecasting
- Financial modeling
- Portfolio management
- Accounting
Yet M&A isn’t just about the numbers; you’ll need strong soft skills like collaboration, communication, and attention to detail to work well with clients and ensure you’re doing the interpersonal work to get the right deal closed.
Experience
While some companies do have in-house M&A teams, you don’t need to work in an M&A specific-job to work on mergers and acquisitions deals. M&A work is a large part of investment banking and some private equity roles as well.
For David Touwsma, partner at venture capital firm EFO Ventures, M&A experience didn’t come from an M&A firm but rather through entrepreneurial ambitions.
“I worked for a few software companies that ranged in size and then, fairly quickly, in my 20s took the entrepreneurial leap into building a retail chain,” Touwsma recalls. “While in retail we acquired two locations and it only served to reinforce my passion for M&A. After that, I launched a few different brands in the residential and commercial services arena. We grew to over 50 locations around the southeast mainly through M&A.”
Touwsma’s story is a testament to the fact that if you’re interested in working in M&A, you don’t need to worry about working solely for or with other mergers and acquisitions professionals. Rather, working on M&A deals and understanding the process is the best way to gain experience.
“Look for opportunities to shadow someone in this field,” Touwsma advises. “Entrepreneurs are generally focused on product development and customer growth, and it is usually through M&A work. Attorneys are also engaged in these transactions so seek advice from them as well.”
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