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Financial Mathematics program to do M&A

Joined
3/5/21
Messages
33
Points
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Is a master in financial mathematics an okay path to do m&a or capital raising processes?
 
MBA makes a lot more sense. More specifically, you need Corporate Finance and Accounting courses to put together a decent M&A model - which really consists of additions and subtractions, with the caveat that you have to be very familiar with your client's accounting standards and basis of presentation (U.S. GAAP, Canadian GAAP, IFRS, etc.). Candidly, financial mathematics will not be useful here (even less so when you take into account that the application you'll learn won't even be in Excel, but rather in Python, R, C++ or whatever).

Also, I came across your other posts on Quant vs IB, and I thought I weigh in. Important to note that I'm not a quant, but an Investment Banker.

1. You seem to be curious about M&A deals
As I'm sure you know, there's major differences in the career paths of quants and bankers. For starters, within any bank, traders (and all their supporting teams; a lot of which are the actual quants) and bankers are not even allowed to talk to each other and are physically separated. Bankers are "behind the Chinese Wall of information" because we deal with material non-public information, which cannot be available to traders to trade on. I bring that up because if you're curious to see how the M&A sausage is made, you'll have to be in IB from the start. You can read as many investor presentations as you'd like but you won't get a true sense of what it takes to actually structure and market a transaction, run a bidding process and finally the satisfaction of closing a deal, issuing a press release and then have the WSJ publish your deal in the front page of their of their business section. Similar thing for any Equity / Debt / Leveraged Finance / etc. processes.​
On the less glamorous side, it takes a ridiculous amount of work to run a sell-side process - I've been on deals that took over two years to complete. I cannot stress this enough: IB is not a lifestyle business. In the junior ranks (Analyst / Associate) you will be working an average of ~85 hours per week and more at times (see the GS leaked IB analysts presentation). During my associate years, I worked 100+ hour weeks, pulled all-nighters, neglected my family / friends and my own health for the sake of getting my work done. Life does get better as you climb the corporate ladder, but even MDs work really long hours. The difference is that Seniors (VPs / Directors / MDs) do not necessarily need to be in the office glued to their computers to get their work done - but the amount of traveling and time dedicated to build solid relationships and get deals is pretty insane.​
2. You seem to want to go into a quant role and then transition into IB
Frankly, this depends on the individual more than anything because it will be a major networking exercise given the recruiting cycle for IB is very very well-defined and rarely do people deviate from the model (not to say it never happens; it happened to me). That said, if you want to join an IB team and (because of what I've stated in my previous point) don't even know how different processes work, you'll have to repeat years. Even if you're a VP coming from any quant area, you won't get hired as a VP in IB. Just something to consider.​
3. Other considerations
Soft Skills - Naturally, some people on this site tend to think of IB as purely soft skills. While not 100% wrong, I strongly disagree with how people tend to disregard soft skills the way they do. It takes time and a lot of work to learn about efficient communication, persuasion, strategizing and cooperation. On top of that, these soft skills are precisely what weeds out people the higher you go up the hierarchy - in any job, it's not always the guy who knows more math that gets promoted or gets the client or gets the juicy bonus (and when I say not always, I mean most of the time in my experience). I'd go as far as to say that if you have these skills, you'll do well in any job in any industry.​
Exit opps - I'll defer to others to opine on exit opps for quants, but I'll say it is hard to beat banking when it comes to this point. It's very common for IB juniors to go into PE, VC, Growth Equity, HFs, Start-Ups, Fortune 500 companies, and obviously other banks. Very much worth noting that because of this (and assuming you have the soft skills to maintain relationships), after a few years in banking you will have a very solid and diversified professional network that you can tap into for any career move you want to make in the future​
Lifestyle - I touched on this before, but I also said I cannot emphasize it enough. When I was on Securitization Finance, a late day for me ended at ~6:30pm and never even considered working on weekends let alone on vacations. In banking, it is the norm to stay in the office well past midnight every single night, be in the office at ~9:15am, work on weekends and during your PTO. I've literally have travelled to Mexico for a wedding, then spent the whole trip in my hotel room working out my laptop. Junior bankers just don't have the time to really nurture personal relationships - friends, family, SO.​
Compensation - Won't get into too much detail because there's a ton of info online about this (see some of my previous posts as well), but banking is very attractive for top candidates because of the money. IB is 100% a revenue-generating role, and the closer you are to the money, the more money you get paid. You'll work a lot, but you'll be rewarded.​
Business model - I've found it helpful to explain banking's lifestyle and compensation by just explaining the business model. Lifestyle is what it is because given the highly uncertain nature of revenue (there won't always be deals to execute) IBDs don't hire an army of people. It makes more sense to have a "decent-sized" team and spread any work across people equally, than to hire and fire a bunch of people every single quarter. On the comp side, we collect millions of dollars in fees when we get deals done but don't really have material overhead - we just need computers, internet and coffee. So it follows that a lot of that cash goes directly to bonuses and compensation, with the caveat that we also pay for non revenue-generating supporting functions within your bank (which is why boutique shops pay more, but also work even more).​
Culture - Because bankers spend most of their time in the office, culture is IMHO a critical factor to consider. Some IB teams have pretty aggressive cultures and treat their juniors pretty badly. Given the high stakes - a lot of money contingent on tight deadlines - it's easy to lose your cool in the workplace. Let's just say you have to have thick skin and be able to take a lot of BS and straight up insulting behavior / comments from people.​
On that note, I'll wrap it up. Hopefully all this will be helpful for you to make a better-informed decision.
 
Your answer is extremelly clear and developed. Thank you very you much for your help which enlightened me a lot
 
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