M&A Associate: How much am I worth?

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A panel of headhunters gives its assessment of typical London pay packages. Base salary: 60,000 Bonus: (in a good market) up to 400%

It's official: the mergers and acquisition boom has returned. Well maybe not quite, but Boots and Unichem's just-announced plan to merge and create one of Europe's largest healthcare retailing groups suggests that after a long, fallow period, life is getting busy again for corporate financiers.

Furthermore, a recovering equity market combined with economic slowdown suggests that for the UK at least, M&A activity in the months ahead could get yet busier. Which is good news if mergers and acquisitions are your bread and butter.

"In this candidate-driven market, we have had to cast the net wider and draw talented individuals from Europe, the U.S. and Asia to work in London's investment banks," admits Olivia Richi-Basurto, manager of Morgan McKinley's investment banking and capital markets division. She says most investment houses, having run down their teams in the 2001-03 period, are now busily building them up again but are having to compete with hedge funds and private equity houses for talent. Other headhunters agree the market is very active.

"After the long lull, banks are keen to find deals and are recruiting at most if not all levels," says Jamie Risso-Gill of Robert Walters, adding however that institutions still rate quality above all else.

So what sort of a background do M&A associates usually have? Particularly at bulge bracket and first tier banks, most will have made the progression from being M&A analysts, where graduates typically spend between one to three years focusing on preparatory work and getting used to the corporate finance lifestyle. They will have sound maths and analytical skills, a good degree from a good university, and often an MBA and a strong track record at one of the Big 4 accountancy firm.

And their typical day? As an M&A associate, the individual will be involved in all aspects of transactions including day-to-day project management, financial modelling and valuation analysis; in addition, associates play a major role in the origination process and marketing to existing and potential clients. They will work hard and for long hours. So in this increasingly febrile market, how much does all this make them worth?

Risso-Gill suggests a typical base salary would be between 60,000-70,000 with a bonus up to 100%. Morgan McKinley's Richi-Basurto says a first year associate would be looking at a base salary of around 55,000 rising to 60,000 after two years, but is considerably more sanguine on bonuses: at least 100% but running up to 250% in the first year and as much as 400% after three years as an associate, especially after a busy year.

If the salary weren't enough, the other positive part of being an M&A associate is that after you've put in the time and have a good track record, the world is pretty much your oyster. Some, wanting a lifestyle change - and maybe shorter hours in the hope of getting to know the wife and kids again - opt for the world of private equity; others decide to work for companies such as Diageo where mergers and takeovers have been a key part of corporate evolution.

Most however stay put, going onto become M&A directors, having recognised that M&A is one of the most exciting areas of the investment world to be in. And one of the best rewarded.

Figures and commentary by Robert Walters and Morgan McKinley

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