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Growth In M&A Activity Opens Up New MBA Career Opportunity

Huge growth in global M&A activity is likely to create MBA jobs at investment banks, but you may be better off starting at a consulting firm.

Wed Jul 9 2014

The global mergers and acquisitions (M&A) industry has seen a huge increase in activity over the past year, which is expected to create a vast number of MBA jobs as investment banks and consultancies seek to cope with demand.

Dealogic, the analyst, calculates that total M&A deals worth more than $1 trillion were agreed during the first four months of the year for the first time since 2007.

Global technology M&A, led by Facebook’s $19 billion acquisition of WhatsApp in February, totalled $144.9 billion in 2014, up 55% from a year earlier and the highest half-year level since 2000. Other sectors including real estate, where M&A volumes are at their highest level since 2007, have experienced surges.

This growth is likely to create jobs across the M&A industry, with MBA students noting that a strong education in core finance competencies such as accounting and modelling, key themes of business school curriculums, place graduates in good stead.

US investment bank Morgan Stanley led the technology M&A advisor ranking in the first half of 2014 with $32.5 billion, according to Dealogic, followed by Goldman Sachs with $26.8 billion.

It is increasingly competitive to break into the bulge bracket investment banks, however, and MBAs may be better off starting in consulting firms to garner skills and experience.

But according to Bill Driscoll, a regional US president at Robert Half International, the recruitment firm, they continue to see demand for MBAs among financial services clients.

He said that competition for these candidates is intense and that MBAs with the right skills can quickly secure three or four employment offers. Financial services employers are looking for MBAs with experience in corporate finance and budgeting, among other qualities.

“The experience professionals bring to an employer on top of their MBA can be the determinant in how strong their job prospects are,” he added.

CEIBS MBA student Daniel Shi works in the investment banking division of Guotai Junan Securities Co in Shanghai. The senior manager, who works in M&A, suggested the ideal career path may begin outside of investment banks.

He added that M&A related roles are unlikely to enable MBAs to become dealmakers until they have sufficient achievement. “You may as well start from consulting firms or corporate business development to acquire the necessary skills and experience.”

Susan Caraviello, director of consultant recruiting at Bain and Company’s Boston office, said in a webinar that the management consulting firm has significant experience in M&A across a wide variety of sectors.

But she pointed out that Bain & Co research shows 70% of all corporate acquisitions fail.

She said that when hiring people to work in M&A at the firm, she seeks the same skills in any new consultant the firm hires. “We seek people who have strong analytical skills and are eager to learn, people who take ownership of the clients’ need to drive change, and people who are confident and passionate,” Susan added.

The M&A fever has also spread to the Middle East and in particular the oil sector. Qatari investors bought Heritage Oil for almost £1 billion, while Glencore, the FTSE 100 commodities group, bought Caracal Energy, the Chad-based explorer, for £807 million.

Susan hinted that they see growth potential in the Middle East region. She said: “We are committed to capitalizing on our growth in this region for further investment.”

But Daniel said that in China only a limited number of firms have a license to be involved in M&A advisory, meaning the sector is not fully competitive and market-orientated. For Chinese investment banks, their expertise mainly lies in the legal procedures of deals for listed companies, while boutiques go after mid-market and small cap deals.

“Investment banks also tend to outsource some of their functions so the headcounts in transaction service departments of Big Four accounting firms will increase as well,” he added.

For the big accounting firms such as PwC and KPMG then, job demand is expect to pick up, agrees Anirban Karmakar, a LUMS MBA graduate who works in M&A for PwC in Dubai.

But he added that this is much more so for developed markets, where job demand is already being witnessed, because there has been an oversupply of investment professionals in the Middle East – but he thinks it will pick up.

“The M&A industry is driven by sustainability, so it needs to show some repeated offering and then hiring will pick up,” said Anirban.

MBA students may benefit from additional qualifications such as Chartered Financial Analyst (CFA) qualifications. Dr Sophia Taylor from Nottingham University Business School said that a CFA gives students an additional grounding.

But the CFA Institute, which administers the exams, said registrations fell slightly last year to about 210,000.

M&A investment banks with a foothold in the US are in a good position, given that American firms such as JPMorgan and Bank of American Merrill Lynch have dominated global advisory in most industries this year.

US banks’ reach extends further. Even in the Chinese financial sponsor buyout market, Morgan Stanley leads the advisor ranking with $5.2 billion, followed by JPMorgan and Citi of the UK.

The global M&A boom shows no sign of abating. A KPMG survey of more than 1,000 M&A professionals, investors and advisors found that 63% anticipate that their US clients will initiate at least one acquisition in 2014.

“With favourable conditions in place for increased M&A activity, such as significant cash on corporate balance sheets, more confidence in the overall economy, and continued low interest rates, expanding core business functions through acquisitions is an appealing strategy for organizations,” said Dan Tiemann, KPMG’s transactions and restructuring lead for the Americas.