Investment banks are power houses when it comes to transactions. They use their magnitude of expertise to provide third party services on deals too! Transaction services teams support various deals across the bank.
Some of the most common situations that call for transaction services are mergers (when two or more businesses join together), acquisitions (when a company buys another) and IPOs (Initial Public Offering – when a company is unleashed onto the stock exchange market for the very first time, ready for investments).
What are transaction services all about?
When a company looks to buy another, there are various different stages and processes they will need to jump through first before they can get their hands on the asset. The transaction services division of an investment bank will act as a kind of Hawkeye or the MOT engineers on a deal before it goes ahead. Their experts will carry out a number of extensive investigations into the finances and workings of the proposed deal.
A big feature of the services offered within transaction services is due diligence. This all sounds rather ominous, but it’s actually pretty straight forward (in explanation terms that is to say; in practice it can get pretty complicated, especially in cross-border deals with huge companies!).
Essentially, due diligence is all about sending in a third party to investigate a proposed or imminent deal to make sure the information provided by the buy side and sell side of is all true and that there will be no hiccups in the transaction process.
And so…time to summon the accountants! They don their Sherlock caps and delve into the depths of the target company to carry out audits on the business. Accountants’ audits and financial analysis will inform the investing party (usually their clients) of what they’re letting themselves in for and provide overall clarity on the transaction. They then have to report back to management and the client on their findings.
How do I get into a transaction services career?
Any entry level transaction services roles with investment banks these days will only be open to graduates (usually with a related degree that demonstrates analytical and logical thinking). Professional services firms (especially the Big Four) also provide extensive transaction services though, so if you’re considering a school leaver programme option then you may well come across due diligence work within this option.
Careers in this area offer the chance to work on some whopping deals – particularly in investment banking where big bucks are the name of the game. Graduates and school start at the foot of the mountain in this domain, usually as analysts. The analysts conduct the bulk of the research into the target company, so it’s a very quick learning curve! These roles develop to involve more and more client contact, so you’ll have to prime up some smooth presentation skills if you’re interested in transaction services as a career. Further along the line you could manage a whole team carrying out due diligence tasks.
Commercial awareness is a big deal in transaction services too – regular client interaction means it’s not a straight forward back office role!