You may have heard of M&A, but what does it mean? Why is it so important? In this article we’ll tell you all about it: the businesses, what it’s like to work in M&A, and of course: how to get in. We got you covered!

M&A stands for Mergers and Acquisitions. It is the process of two businesses merging into one (merger) or one business making an offer to buy another firm (acquisition). Why would a firm buy another, or merge two businesses into one? There are various reasons, and it’s mostly for value creation. The acquirer buys the shares of the target firm after doing extensive financial modelling. They also pay a mark-up on the shares. After merging, so-called synergies are created. You can see this as a less competitive market after the merger, which leads to lower production costs. Or, if a supplier and customer merge, they can eliminate bargaining costs.

How does an M&A valuation work? First you value the target as a stand-alone firm. Then you value the synergies which come from the merger. Adding both of these values will give you the acquisition value. In M&A you can have friendly or hostile takeovers. A friendly takeover will happen after approval of the shareholders and management. A hostile takeover happens when the management objects to the takeover, which will force the bidder to make a hostile offer. They will either acquire enough shares to take over control or make a tender offer directly to the shareholders.

We asked two women in our network, why they love to work in M&A.

“M&A advisors act as intermediaries between companies that demand capital and those that supply it. The work involves identifying potential targets, conducting industry research, preparing financial analyses, and developing strategies. Each deal is unique, complex, and comes with its own challenges. I find M&A exciting as it requires both analytical and strategic skills.”

– Suus van der Wijk, intern M&A.

“Working in M&A can sometimes be tough. However, the learning curve you experience as a Corporate Finance trainee is in my opinion amazing, especially since I’m only 24 years old and already have 1.5 years of experience. I like to work in a fast-paced entrepreneurial environment, and that’s (almost always) what you get in M&A. Each transaction is different. Some are easy and straight-forward, while others can be extremely challenging. That’s what makes it fun for me. Especially if you find a sector that you’re passionate about, and fits with your personality!”

– Julia de Vries, Corporate Finance trainee at ABN Amro

Usually, teams or boutiques focus on a certain industry sector. Finding the right company allows you to work on deals that really excite you.

We asked Julia de Vries to explain us the differences between M&A at a small boutique, and M&A at a big bank, since she worked in both. She will shine a light on what to consider when doubting between these two.

Julia: “In general, people who want to make it into investment banking, always tend to have a preference for the large American or London investment banks, as it is most beneficial for your resume. I felt like doing it the opposite way by starting at a small investment boutique.” 

A boutique is defined as a small financial firm that is specialised in a particular segment of the market. They do smaller transactions as big banks, but they are very specialised in the segment they are in. When you start as an intern, you work in a small team which allows you to be involved in all aspects of the deal process. Think about going to client meetings for example. A difference with the bank, is that you do not get specific trainings, you just start, and you find your own path.

Julia: “The main reason for me to start at a smaller firm, was the responsibility you get from the beginning. Naturally, the environment is entrepreneurial and fast-paced, and since the transactions are often smaller, you have the opportunity to work with interesting founders straight away. So, if you have a strong team around you that can guide you through your internship, you’ll gain a lot of exposure.”

Julia: “Now, I’m a graduate trainee at ABN AMRO, which is the complete opposite from the small boutique. I think working at a large bank such as ABN AMRO provides you with many opportunities to develop your career extremely fast. The environment is more international and the transactions you’re working on are large (c. EUR 250m in sales per year). You’ll also meet lots of other young professionals.”

“Besides that, what I found really interesting are the cross-selling opportunities. Since you are working at a large bank, you can provide the client with not only M&A advice, but also offer other products and services such as loans, to finance the transaction. At a later stage, you could also help the client with an IPO and other follow-on offerings, for example.”