What do partners do at Goldman Sachs

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In recent years, one trend has emerged in M&A advisors and investment banks: Recruiting new M&A experts is becoming more and more difficult, while at the same time both banks and consulting firms tend to be looking for new staff.

The main reason: "There were recently a few smaller graduate years, so that simply not enough new potential personnel was available on the market," reports Mario Barisic from the personnel consultancy Fricke Finance & Legal. In addition, it is becoming increasingly difficult to get young people with strong personalities excited about the job of M&A consultants.

M&A career starters earn up to 80,000 euros

The work of an M&A consultant is still well rewarded: As a career starter (analyst) you come to high-ranking companies - to which Fricke the Deutsche Bank, J.P. Morgan, UBS, Barclays, Goldman Sachs and Société Générale counts on an annual salary between 65,000 and 80,000 euros.

The bonus payments at this professional level are already higher than with experienced M&A experts in companies: Analysts receive between 20 and 50 percent of their income as a bonus. In smaller houses, bonus payments of between 20 and 30 percent come on top of salaries of 55,000 to 70,000 euros.

Pay gap at Bulge Bracket and M&A boutiques

If you are promoted to associate, senior associate or assistant vice president, the top investment banks - also known as “bulge brackets” - offer salaries of up to 95,000 euros and bonus payments of between 50 and 100 percent of the salary.

The colleagues from the smaller houses and the boutiques earn less: As an assistant to the Vice President, you get a maximum of 85,000 euros and can expect a bonus of a maximum of 50 percent. Even Vice Presidents or Senior Vice Presidents at smaller consulting firms only make it just over the 100,000 euro mark. The same position in the Bulge Bracket, on the other hand, brings in up to 150,000 euros a year.

Directors receive up to 200 percent bonus

The M&A advisors achieve the next step in salary with the appointment of a director. Directors and senior directors achieve an income of up to 230,000 euros at the bulge bracket houses and can also look forward to a 100 to 200 percent bonus on their salary. The salaries of smaller banks and consultancies are slightly lower: A senior director there averages a maximum of 150,000 euros, but has the prospect of a similarly high bonus as his colleagues in the top companies.

In the course of the promotion to Managing Director, the annual income in the Bulge Bracket increases to up to 270,000 euros. That is about as much as the M&A bosses in large German companies cash in. The bonus can reach up to 200 percent of the base salary. In smaller companies, most managing directors tend to be just under the 200,000 euro mark, but can hope for a bonus that is as high as their colleagues.

High demands on M&A youngsters

With such tempting salaries, it seems surprising that investment banks and M&A advisors have such great difficulties recruiting. But part of the answer also lies in the demands that banks place on their newcomers, says Mario Barisic: “Investment banks, for example, require an above-average degree from a renowned university - for example from the University of St. Gallen or the Ludwig Maximilians University in Munich . ”Graduating from a CFA program is also welcome during the first few years.

In addition, even beginners at lower hierarchical levels would have to have real work experience, because the headhunter believes that in-service training is uncommon in the M&A area. "These high requirements often do not match what potential applicants expect from their job and what they want personally," says Barisic. The result: Around 29 percent of all newcomers to M&A consulting quit their job in the first 48 months, according to the personnel consultancy.

29 percent of all M&A career starters quit their job after four years.

The staff shortage is still not an extremely pressing problem for most M&A consultants. But that could change - as a result of Brexit, of all things, as Mario Barisic believes: Many investment banks would relocate their locations to continental Europe, including Frankfurt, in the course of Brexit. “That is why more jobs in M&A advisory will be created here in the long term.” In order to be able to fill these positions, the investment banks will probably have to offer their M&A specialists more than the traditionally high salaries and bonus payments in the future.

olivia.harder [at] finance-magazin.de

Would you like to know what your colleagues from the M&A departments in companies earn? The first part of our salary series informs you about salaries in the corporate M&A area.