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Strictly speaking, it would be more accurate to talk of MA&D than M&A. As well as mergers, in which two companies join as equals, and acquisitions, in which one company buys all or part of another, M&A bankers also work on disposals, helping client companies to sell all or part of their business.

Most large investment banks become involved only in the biggest deals – those worth at least AU$100m. Transactions worth AU$15m to AU$100m are typically dealt with by the M&A divisions of accountancy firms. Transactions worth less than AU$15m are the domain of solicitors and retail

Trends

2007 was a good year for Australian M&A. The country’s 3,161 M&A deals during the year were worth US$405.6bn, up 107% on 2006, according to information provider Thomson Financial. A lot of that was down to private equity funds – which were involved in 107 deals worth US$20.2bn.

The biggest deal of last year was Wesfarmers’ huge AU$19bn takeover of Coles.

2008 doesn’t look quite so promising, however. As the global credit crisis bites and financing becomes harder to secure, M&A activity is expected to fall. January and February deals totalled US$4bn – down 40% on 2007, according to Bloomberg, although 2008 began with a bang with BHP Billiton reviving its US$148bn move on Rio Tinto.

Anthony Sweetman, UBS’s head of M&A, predicts that Chinese and Indian demand will keep commodity prices high and resource companies desirable (ie, other companies will want to buy them).

Key players

Thomson Financial’s 2007 league tables have UBS, Deutsche Bank, Macquarie Bank, Morgan Stanley and JP Morgan leading, with Lazard, Citi and Gresham Partners close behind.

In the first months of 2008, the leaders were UBS, Deutsche Bank, Macquarie Bank, Morgan Stanley and BNP Paribas, which is moving strongly into the Asia Pacific region.

Roles and career paths

Mergers and acquisitions is an advisory role, with M&A bankers providing advice to client companies on buying, selling and merging with other companies. They are typically part of a broader 'corporate finance' advisory team, which also advises client companies on how to raise the money needed to finance a transaction.

As a rule, the more senior you become in M&A, the more contact you have with clients. As a junior banker, or analyst, you will spend a lot of time working on 'pitchbooks'. These are documents outlining a bank’s ideas for a particular transaction – for example, should the client buy company X or Y and, if so, how can they finance the deal.

Analysts usually conduct basic industry research for the pitchbook and build the financial models used to price the companies concerned. One notch higher than analysts in the banking hierarchy are associates, who oversee analysts’ work and check their models are correct. Further up the scale are vice-presidents, who survey the work of analysts and associates, and often ask for the pitchbook to be partially or completely re-written (even if it means staying up until the early hours of the morning making last-minute changes). Vice-presidents report to directors and managing directors, who 'own' the client relationship (ie, they are the main point of client contact).

It is usual for pitchbooks to come to nothing: clients decide not to go ahead with the suggestions or engage a rival bank. However, when a pitchbook elicits a positive response, the M&A team moves into 'execution' mode – seeing the deal through to completion.

Live M&A deals are seriously hard work. The people involved often work days, nights and weekends, and are at their clients’ beck and call. Once a deal is underway, juniors can expect to be kept very busy assembling the reams of financial information and legal documentation required for its completion.

Pay

M&A salaries are still lush, says Darren Terkel at recruiter Michael Page. “People one to three years out theoretically get between AU$80k and AU$125k, but no one in a bulge-bracket bank starts on less than $100k, with bonuses of 100%.”

By third-year associate level (six years in), Oliver Darkes at recruiter Carmichael Fisher says, base salaries average AU$150k-$175k, with a top of AU$200k and bonuses of 100%.

Darkes says managing directors – who are at the top of the banking tree and have typically been working eight years or more – can earn AU$400k-$500k in base salary alone, plus bonuses that are multiples of this.

Skills

• Numeracy M&A is all about buying and selling companies, so you’ll need to be able to work out how much they’re worth. “First and foremost, you’ll need to be numerate,” says UBS’s Sweetman.

• People skills You won’t get anywhere in M&A if you can’t look someone in the eye and hold a half-decent conversation. “Strong interpersonal skills are vital because M&A is essentially a client service,” says Sweetman. “As for personality, all kinds of people are involved, but they are rarely timid or easily intimidated,” he adds.

• Teamwork We look not just at academic grades but at the logical approach you take to reach a solution, and we watch how you use the team to arrive at a solution or strategy. The effect you have on the group and the way you interact with them is vital,” says Paula Knowlen, general manager for Westpac at recruiter Hudson.

• Motivation M&A is hard work and the hours can be long, so banks aren’t looking for slackers. “Having excellent academics is a given,” says David Miles, COO of JPMorgan. “We then look for people who are really highly motivated; maybe they have started their own business or run a uni society or been involved in community activities, like a surf lifesaving club.”

Miles adds: “M&A work falls into two phases: the first few years I see as an apprenticeship. It is highly technical and requires extreme attention to detail. The second phase is client-focused: you have to gain their trust and communicate with them to win deals. For M&A, you need people with both sets of skills.’’