Corporate Finance
Corporate Financiers provide a broad range of financial services and advice to corporations, institutions and governments. Be careful, as the Corporate Finance function can be called several different things, though the type of work and skills required are virtually the same. For example, Corporate Finance is also described as "Investment Banking", "Origination, "Corporate Advice / Advisor" and "Merchant Banking". Some banks also have separate Mergers & Acquisitions divisions. The scope of work is very broad, including Mergers & Acquisitions (bank acts for the buyer or seller of a company and helps negotiate the transaction, or may be retained to advise on other strategic issues or formulate a defence against an unwelcome bid); Equity & Debt Issuance (advising client on the best means of raising additional finance, the right timing and which markets to access); Privatisations (advising governments on the sale of publicly owned entities); Company Reconstructions and Disposals of Businesses; and Initial Public Offerings (IPO's).
Your job will be to advise corporations, institutions and governments on the best means of raising capital for new projects and expansion purposes, taking account of broader strategic factors and market opportunities. Experienced professionals will have developed very close, board-level relationships with clients. They will often act as the primary contact for development of the Investment bank’s overall relationship with the client, able to bring together the specialist skills of their colleagues in other areas of the bank in order to provide unique solutions. New recruits, usually known as ‘Analysts’ if they have recently graduated, or ‘Associates’ if they already have several years experience and / or an MBA, will help identify takeover targets, help prepare strategies to advise clients on financing options, coordinate the project with specialist advisers such as accountants and lawyers, and liaise with regulatory bodies.
Corporate financiers often specialise as their careers progress, focusing on particular industries or in specific areas, such as defence strategies, hostile takeovers, cross-border M&A, privatisations, or flotation of private companies. However, some remain generalists, acting as senior relationship manager for a group of clients who the individual has got to know well over some years. In these cases, strong interpersonal skills and very close knowledge of the client’s business are essential: It is not uncommon for senior corporate financiers to join the board of a client and some eventually leave their bank to become executive directors.
Many Investment banks have integrated corporate finance with their capital markets origination and underwriting activities. This allows the bank to provide a streamlined service; e.g. advising the company on an acquisition, then raising the new equity and / or debt to provide the necessary finance. Typically, the bank will underwrite all or part of the new equity issue, syndicating the balance with a group of other banks, and ultimately sell (or ‘place’) its own underwriting allocation with private and institutional investors. Capital markets specialists covering Equities or Debt products work closely with Corporate Financiers, advising the client on the type(s), timing, pricing of equity and other capital. They help prepare an ‘offering prospectus’, in collaboration with other professional advisers and in accordance with regulatory practices in the market(s) of issuance. Arranging the underwriting group and working with trading and sales teams on primary placements with investors are important functions.
Corporate Financier
Having read these notes, you will appreciate that Corporate Finance offers graduates an opportunity to follow a variety of career paths. However, employers will look for a similar range of skills and abilities, including analytical skills, good numeracy and financial modelling skills (you may spend endless hours as an Analyst running corporate valuation models and preparing sensitivity analyses). Competition for entry-level positions is intense; you will need excellent academics to stand any chance of even a first interview! Your academic discipline is less important than possessing natural intellectual brilliance. In addition, good interpersonal and relationship management skills are crucial for your long term success. Much of the work is project / transaction based and you will have to demonstrate a capability to work effectively as part of a team.
In addition, a definite entrepreneurial flair will help you to develop new ideas and propose solutions for your clients. Oh, and did we mention hours of work? One bank has described these as being "varied and unpredictable"! We suggest that you do not choose Corporate Finance as your career unless you are prepared to devote yourself totally to the job, especially during your early years. On the other hand, if you are successful, the financial rewards can be significant.
